It was the classic case of an Initial Coin Offering (ICO) turning into an exit scam. Founders of Pure Bit, a Korean cryptocurrency exchange, are guilty of running off with 16,000 ETH (worth approximately $1.8 million today) after raising money for their Pure Coin ICO.

The ICO was to take place until November 30, but on November 9 the founders decided to shut down the website and remove users from the Kakao Talk messenger group. After closing up shop, they emptied users’ wallets and fled with the Ethereum funds.

Running an anonymous operation, Pure Bit told users that owning the coin would provide dividends and rewards for use. ICOs are currently banned in South Korea, but this did not stop investors from participating. A minimum requirement of 5 ETH along with many campaigns allowed the ICO to raise funds quickly and bountifully.

A week after fleeing with the money, however, the CEO of Pure Bit claimed he was feeling guilty after not fulfilling their promise to open the exchange.
The founders then did something completely unheard of in an exit scam. They began to return the stolen money.

Issuing a statement about the scam, Pure Bit CEO said “I negatively affected investors in the project psychologically and financially. I made an unforgivable mistake that cannot be turned around, blinded by money. It has been less than a day, and I have already started to suffer from guilt. Although it cannot be compared with the hardship faced by the investors, I also felt significant guilt. I sincerely apologize to all of the investors in the ICO who were affected by the operation.”

About half of the funds have been returned to their original wallet addresses. There are promises to return the remaining ETH in the coming days without subtracting any fees that were paid in the process.

Given that over $100 million have been stolen in exit scams this year alone and ICOs are illegal in this jurisdiction, it is likely that there will still be an official investigation by South Korean authorities.

As we’ve warned members and others many times, do your own research. Although this scenario turned out well, investors need be careful with how they invest their money in the crypto world. These types of scams have been common, but with hope, as regulations are put in place around the world and consumers become more crypto conscious, there will be a reduction in fraud or at least successful fraud.