On September 11th, Police raided the Gate.IO Crypto exchange office over their recent listing of the DeFi token “Kimchi.”
What was the reason behind the raid?
Police raided the office because several reports were accusing the Gate.IO exchange of crashing the Kimchi Token price via their Kimchi Token listing on September 2nd–and there is some truth to that.
At the beginning of the day, on September 2nd (midnight est), one Kimchi Token was worth $8.95. Leading up to 7 am EST, when Gate.IO said they would take Kimchi trading live on their exchange, the price of Kimchi Token steadily declined. By the end of the day, one Kimchi Token was worth $2.80–roughly 70% less than the 8.95 it was trading earlier in the day.
Many investors suffered significant losses and blamed Gate.IO since their token listing could arguably have catalyzed the rapid decline of Kimchi Token’s price.
However, Gate.IO says this was not the case. The exchange tried to defend itself by saying the market decided the price of Kimchi Token, and that their exchange can not be accused of facilitating the rapid price decline since Gate.IO does not charge a listing fee.
A Gate.IO spokesperson said,
One of Gate.io’s offices was recently visited by the local police prefecture in China. Due to the price drop in KIMCHI, some users who had invested in the token experienced losses due to market volatility issues amidst the increasing buzz from DeFi. They decided to massively report the incident to local authorities.
However, it is unclear where the police investigation will go from here. Regardless, law enforcement officials around the globe are aware of DeFi and taking action when necessary. Recently, Sushi Protocol’s founder was accused of exit scamming but quickly returned the Sushi treasury funds once Sushi Token investors were advised to lawyer up and press charges against the Sushi Token founder.