Is COSS currently in the middle of an exit scam?
It’s been a week of controversies for the Singapore-based cryptocurrency exchange.
It began on Wednesday, when COSS made a surprise announcement on their blog (and notably not re-sharing it on any social media) that it will be freezing all trading activity over the next few hours.
The exchange went on to explain that withdrawals and deposits will be suspended for the next ‘3-4 weeks’, as it migrated ‘to a more advanced platform’:
“All open orders will be cancelled, balances and accounts will be migrated, and your funds will be safe.” the post assured, “There is no need to panic. Please do not believe in rumours or FUD spread by false messages and groups across any channel.”
Shockingly enough, COSS’ impassioned plea did not immediately put everyone affected at ease, as news spread around the cryptoverse. Shortly afterwards, u_Antranik, one of the longtime moderators of r/cossio, shared the news on r/cryptocurrency in a thread fittingly marked with an all-caps ‘warning’ label:
One user mentioned that COSS actually alerted them of the imminent suspension via email, but seemingly did so after the ban was already in effect:
The total lack of prior communication plus the flimsy reasoning provided by COSS led to most users screaming ‘exit scam’ in the initial thread:
Given the above, there’s already been a few threats of legal action touted against the exchange:
And while some were sympathetic to the ones affected, there’s been a fair amount of ‘not your keys not your coins’ thrown around r/cryptocurrency. Meanwhile, others saw this as the latest reason to ditch centralized platforms and mobilize to DEXes:
After the thread, an anonymous COSS spokesperson reasserted that the migration is not an exit scam, and the exchange is now “getting clean code that's scalable, which works, and which suits the industry today”. He did, however, admit that the management purposefully withheld information about the freeze to prevent mass withdrawals of funds.
However, turns out COSS was not done trying to make itself look bad.
In a followup thread on Friday (which actually got more attention than the initial COSS thread) u_Antranik revealed that he was removed - and subsequently banned - from r/cossio after posting about the withdrawal ban on r/cryptocurrency:
Now exit scams are fun, but if there’s one thing we learned from r/ethtrader - it’s that crypto reddit loves nothing more than a good moderator drama. As a result, soon after u_Antranik’s followup thread yesterday, COSS appeared on our list of top developing stories on crypto social media:
Similarly, Sanbase recorded more than 90 new mentions of ‘COSS’ on crypto social media over the last few days, mostly concentrated on reddit:
Following suit, several other users mentioned that they too were recently banned from the COSS subreddit for sharing dissenting opinions:
And while the general consensus seems to be that COSS management is, at best, grossly incompetent and, at worst, in the middle of a very public exit scam, some lamented the fact that the exchange showed signs of promise right after their ICO in 2017:
A trusty minority does still believe that the migration is legit, and the exchange will be back in a month’s time with a revamped UI and their users’ money:
As outlined in the announcement, COSS has already migrated all of their warm wallet funds to a brand new address, as you can see in our Historical Balance tool:
It would be prudent to keep an eye on this address in the next ‘3-4 weeks’, so I’ve set up a quick alert if any ETH leaves the wallet in the coming days. You can subscribe to it here.
For now, there’s not much to do but wait this out. According to some reports, the exchange holds about $2M in customer funds, so while an exit scam is unlikely to crash the market, it would still royally suck for everyone affected. As the kids like to say: