Cobinhood and Dexon Foundation have left their investors high and dry by pulling off what appears to be a carefully planned greedy exit scam. Just last month, they raised $3 Million USD from investors, and today they simply unlocked all of DEXON's Coin (DXN) to dump onto the market.
Of course the cryptocurrency exchange has suddenly announced that Cobinhood is closing its doors for good. And at the same time they filed for bankruptcy, mentioning that liquidators have already been appointed to lay off its staff.
Cobinhood: Another showcase of the worst a centralized exchange has to offer
Going through the timeline, the whole ordeal seems to have been a carefully planned exit scam to abuse a centralized exchange's power over its users and scam investors out of as much money as possible. Most likely Cobinhood fell into financial difficulty due to the 2018 bear market, and has been planning an eventual exit scam for some time.
It is another showcase of how easy it is for a centralized exchange to execute a plan of fraudulent activity for the purpose of stealing their investor's or user's funds. And another argument on why we need to move token offering Launchpad platforms towards a decentralized setup. Investors who participate in token offerings using our upcoming Saturn Launchpad are protected from this type of exit scam - as they never give up or lose control of their coin or tokens.
Behind Cobinhood's exit scam are the two co-founders Tai-yuan ‘Popo’ Chen and Wei-Ning Huang. And surprise surprise, Chen is also a co-founder over at Dexon Foundation. Another indication that this whole thing was planned from the start to defraud investors.
- In 2017, Cobinhood raises $13M via its own ICO with COB token. They promised investors zero fees and that COB token holders would receive dividends from all token offerings held on the exchange (hah!).
- Last month, DEXON ICO raised $3M with its initial exchange offering held on Cobinhood. Investor's DEXON Coin (DXN) was suppose to be unlocked today on the 20th of May.
- On the unlock date, Cobinhood sells off massive amounts of DXN for their own profit while declaring bankruptcy.
- Dexon Foundation appears to join in on the dumping, and also spams zero transactions on their network to quickly hide the massive sell-offs.
- Large amounts of COB are also moving around suspiciously, appearing to indicate Cobinhood are also dumping their own token.
And I would also like to point out we are talking about an exchange that positioned itself as helping the industry grow by not charging projects listing fees - but then during the process would ask for anything between $90k - $300k claiming it was needed for "promotions".
DEXON itself looks like it was just another case of crypto vaporware, a whitepaper filled with buzzwords, promising to fix every problem we find in other blockchain systems with "high-scalability" and "top notch security".
Another painful reminder of the need to use blockchain technology as intended: replace corrupted middlemen with trustless smart contracts. And thus to take the imbalances of power between a user and the exchange out of the equation.
If we simply use blockchain to mimic what financial centralized institutions already do such as banks or stock exchanges, then we are doomed to be plagued by their same problems of fraud.