Fraudulent South Korean Exchange Pure Bit Nabs $2.8M in ICO Exit Scam

A South Korean ICO has defrauded its private sale investors out of roughly 13,500 ETH ($2.8 million) before disappearing from the internet entirely.

Pure Bit, which has already pulled the plug on its website, has apparently conducted a fairly routine exit scam for its Pure Coin token sale. The cryptocurrency was pitched as an exchange token for Pure Bit, an exchange that was supposed to launch by the end of the month. The Coin  promised to give investors shares of the exchange’s trading revenue as well as discounted fees for trading, and its anonymous team claimed that it would burn 90% of token supply over a three year period.

A block explorer for the ICO’s Ethereum wallet displays several in-bound transactions from investors beginning on November 4, 2018. On November 9, 2018, however, an initial 500 ether was transferred out, with the remaining 13,178 withdrawn 20 minutes later.

Not all of the evidence of this company’s very existence was destroyed immediately, however. A thread on Reddit captured some of the last moments of the exchange and took several screenshots with translations from the original Korean.

According to Reddit user u/Tbid, who evidently watched the saga unfold, Pure Bit was a crypto exchange that announced an ICO launch of an exchange token. Almost immediately after the ICO ended, however, all of the funds were spirited away to another single wallet address.

As depicted in the attached screenshots, the community admin quickly kicked out every participant in their Kakao chat thread, before sending a final message of “Thank You.” This information was corroborated by a Twitter thread, which added that the admin’s message on their now-defunct Kakao profile was a terse but excessively formal apology.

Between the wallet transfers, suspicious website activity and the admin’s explicit apology, this exit scam is about as by-the-book as they come. Duplicitous activities such as this are a recurring threat in the world of ICO launches, which forms a large part of the reasoning why South Korea banned ICOs altogether.

Having committed a crime even before stealing such vast sums of money, the anonymous administrators of Pure Bit are likely in for some extensive legal troubles. As one commenter in the Reddit thread remarked, the South Korean government is likely to be “hot on their tails.”

Even without the threat of exit scams, South Korean law enforcement is well-used to dealing with routine cybersecurity threats, as the world’s largest crypto hacking syndicate, which is literally sponsored by the North Korean government, has targeted South Korean cryptocurrency exchanges on a number of occasions.