Police raid Gate.io exchange over DeFi listing

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On September 11, police raided the Gate.io digital currency exchange office over their recent listing of the DeFi token “Kimchi.” 

https://twitter.com/bigmagicdao/status/1304081583427649537

Why was Gate.io raided?

Police raided the office because there were several reports accusing the Gate.IO exchange of crashing the Kimchi Token price via their Kimchi Token listing on September 2—and there is some truth to that. 

At the beginning of the day on September 2nd (12 am est), one Kimchi oken was worth $8.95. Leading up to 7 am EST, the time at which Gate.IO said they would take Kimchi trading live on their exchange, the price of the 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 at earlier in the day.

After $kimchi price went down massively, many users of gate lost quite a lot of money, so they’ve reported Gate, but heard from multiple resources it’s just the customer support office for gate. It should probably won’t have very big impact on Gate. https://t.co/lUAkPrHaNY

— Molly (@bigmagicdao) September 10, 2020

Many investors suffered significant losses and blamed Gate.io since their token listing could arguably be said to 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 token’s price, 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 funds to the Sushi treasury once token investors were advised to lawyer up and press charges against the Sushi founder.