South Korean ICO Pure Bit Pulls $2.8 Million Exit Scam

A fraudulent South Korean startup has pulled a $2.8 million exit scam, garnering 13,500 ETH from its ICO campaign before disappearing from the web. Pure Bit shut down its website after finishing its Pure Coin token sale on November 9th. The coin was intended to serve as the exchange token for the Pure Bit exchange.

Pure Bit exchange was scheduled to launch at the end of this month. The exchange offered Pure Coin holders a fraction of Pure Bit exchange’s revenue in addition to discounted fees on trading. Pure Bit’s ICO campaign was led by an anonymous group who promised to burn 90 percent of the token’s supply over the course of three years following the exchange’s opening.

Bitcoin Magazine reports that a block explorer for the ICO’s Ethereum wallet tracked several inbound transactions from investors beginning on November 4th, 2018. However, beginning on November 9th, the ICO’s initial 500 ether investment was transferred out, with the remaining 13,178 withdrawn 20 minutes later.

The fraudsters behind Pure Bit have since wiped away the majority of their online footprint. A few Reddit users were able to take some screenshots of the company’s website before it went offline, and have added English translations.

“All the more reason to wait for an ICO to launch, and prices to crash lower (as is with the vast majority of ICOs) before investing,” said one user. “On the upside, if the scammers were located in South Korea, they’ll have the South Korean government hot on their tails.”

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🇰🇷 – New Korean exchange Pure Bit just pulled an exit scam claiming 13,000ETH from its investors as we speak. Kakao channels are emptying and the site has been pulled.

This is why we can’t have nice things. Karma comes back hard when you screw this many people over. pic.twitter.com/GDkjiz1gAq

— Korean Cryptocurrency & Blockchain News (@BlockchainROK) November 9, 2018

The consensus among the Reddit users who closely followed the scam is that all of the funds from the finished Pure Bit ICO campaign were sent to a single unknown wallet address. The screenshot above depicts a Pure Bit admin removing all participant’s from Pure Bit’s Kakao chat thread. The final message from the admin simply reads, “Thank You.”

While it cannot be entirely confirmed at this point whether or not this is indeed an exit scam, all the evidence appears to be pointing in that direction. As described by Bitcoin Magazine this is a pretty textbook case for why the South Korean government has banned ICOs completely.

Pure Bit was also reported to have been running an affiliate campaign, which rewarded users who brought in new investors with extra tokens. Minimum investment for the token sale was approximately $1,000 (5 ETH).

As previously reported by Unhashed, new data suggests that ICO exit scams have cost investors over $100 million as of August. However, given the limitations for these sorts of data collection investigations, it’s likely the total number of stolen funds is significantly higher.