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Cryptocurrency exchange Cobinhood is shutting down, purportedly for one month for auditing reasons. The exchange has been embroiled in controversy for months now, with many expecting an exit scam was in the making. And while the exchange is shutting down, it insists this is not an exit scam and that the clients can still access their funds.
Cobinhood took to Twitter to make the announcement, saying that it will take the one-month period to audit all account balances. It claims that the users can still withdraw their funds, but deposits are prohibited as the users could lose their funds.
COBINHOOD Exchange is shutting down and auditing all accounts' balances from Jan 10 to Feb 9 in 2020. It will be re-opened on Feb 10, 2020. All COBINHOOD users can then retrieve their funds accordingly. Please DO NOT make any deposits; it may result in permanent loss.
— COBINHOOD (@COBINHOOD) January 10, 2020
Some users have already claimed they are unable to access their funds. Moreover, the exchange didn’t offer any guidance to those who own COB tokens, its native crypto. COB owners were to receive dividends from the profits that the exchange would make. The supposed profits would be from underwriting services for companies conducting ICOs as the Cobinhood exchange was a zero-fee platform.
Despite the red flags, the Taiwan-based Cobinhood managed to raise over $10 million in its ICO. One of the factors was its partnership with Hollywood actor and singer Jamie Foxx, who endorsed the exchange’s ICO on his social media channels.
Looking forward to participating in the new @cobinhood Token! ZERO fee trading! #CryptoCurrency #BitCoin #ETH – https://t.co/1XFiosn22S pic.twitter.com/A7es0C2Rxr
— Jamie Foxx (@iamjamiefoxx) September 18, 2017
Following its ICO, Cobinhood founders allegedly had a dispute that culminated in one of them, Tai-yuan Chen, being kicked out of the company. The exchange claimed that Chen was suffering from emotional instability which was causing safety concerns for the employees. For a brief period, the employees were asked to work from home for their own safety.
Shortly after, rumors that the company was planning an exit scam became rife. Several reports claimed that the company had even appointed a liquidator and that the founders had made off with some of the money generated from its ICO.
Popo Chen, one of the founders, reassured users in May 2019 that no exit scam was taking place. He blamed the upheavals on infighting between some of the institutional investors and the company’s management, an issue which they had since resolved.
The Cobinhood saga comes just days after yet another exchange, COSS abruptly suspended trading on its platform. The Singaporean exchange claimed that it was conducting maintenance of its systems and would halt trading for three to four weeks, a move that many interpreted as an exit scam.
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