South Korea’s cryptocurrency exchange Allstarbit drew fire from investors for undervaluing the existing digital currencies in swapping them into new ones.
Ahead of its formal opening Thursday afternoon, the exchange announced that it would swap Lucy into Lucy Alpha. The swap rate was supposed to be 1 to 1,000. At the time of conversion, one Lucy was traded at 0.6 won. Thus one Lucy was supposed to be 600 won Lucy Alpha.
However, at the opening price, one Lucy Alpha was traded at 100 won. It means investors lost 5/6 of its investment value. “The swapping plan was manipulative to extort money from investors,” an angry investor said.
A Seoul lawyer said it is unclear whether the exchange manipulated the swapping prices or the swapping plan was a premeditated financial scam. He said, “We need to check why such an arbitrary swapping took place before filing a lawsuit,” he added.
A group of investors said they would file a lawsuit against the exchange unless it made clear its position convincing to the investors.
An investor told the Block Media that it was an illegal extortion of money from investors. No Allstarbit officials were available for comment. Only a call center staff said she would convey the complaint to the exchange.
South Korea has no law or rule on establishing a cryptocurrency exchange. Theoretically, anyone can open the exchange. Allstarbit is one of the irresponsible exchanges.