Thursday, April 2, 2020
Bithumb's Plan to List New Cryptocurrency Faces Backlash
A Ponzi Scheme?
Bithumb's Plan to List New Cryptocurrency Faces Backlash
  • By Yim Hyun-su
  • May 16, 2018, 17:13
Share articles

Top South Korean cryptocurrency exchange Bithumb has withdrawn its plan to list a new cryptocurrency following a backlash from investors over suspicious business ties.

Bithumb announced plans to list a new blockchain platform Popchain (PCH) on its official website on May 15, but it postponed the scheme the next day after media reports that just two accounts owned over 90 percent of all traded tokens, which are also known as Popcoin.

Bithumb has been accused of running a Ponzi scheme with its new cryptocurrency.
Bithumb has been accused of running a Ponzi scheme with its new cryptocurrency.

Popchain is a 3.0 blockchain platform created by developers from the content company THE E&M, which allows a fairer distribution of digital content, according to Bithumb.

In a statement released online, the cryptocurrency exchange said “unfounded rumors have been spread in the market” and that it would wait for Popchain to be traded on other exchanges first.

The comment came in response to growing concerns over the new cryptocurrency’s lack of credibility, and suspicious ties between Bithumb and some of the developers behind the new platform.

The initial announcement first came without plans for an initial coin offering (ICO), a rare move for a new cryptocurrency that soon drew skepticism.

Wary investors took to the internet to warn others against the new cryptocurrency, some of them accusing the new blockchain platform of using similar source codes used in other cryptocurrencies such as Bitcoin.

Prior to the U-turn, the Korea Blockchain Association advised Bithumb against listing Popchain and urged it to reconsider its decision as a number of warning signs appeared including the lack of an ICO and accusations of using copycat source codes.

South Korea is one of the largest cryptocurrency markets in the world. Bithumb, one of the leading cryptocurrency exchanges in the country, earned over 330 billion won in profit through commission fees last year, according to data from the Financial Supervisory Service.

Earlier this year, lawmaker Lee Hyun-jae said, citing data from the Korea Customs Service, that international travel expenses had spiked among South Koreans as cryptocurrency investors went abroad to buy cryptocurrencies on the cheap.

Related Articles