Gate.io Exchange Survives Police Raid

Their gripes centered around the KIMCHI token, a volatile asset that lost investors a lot of money during a September 3 price plummet. Nobody likes losing in a crypto scam, but not everyone calls the cops. A group of dissatisfied crypto traders decided to break the trend of unofficial internet whining and call authorities in China. Internet rumors made what happened next unclear.

A Real Pickle

On September 11, 2020, a Gate.io office got a visit from police after angry users complained en masse. Some employees released pictures and videos on the internet with little information, causing speculation and conclusion-jumping by crypto Twitter. https://twitter.com/bigmagicdao/status/1304081583427649537 Twitter user @bigmagicdao (Molly), a marketing executive in the crypto space, posted a video on Twitter originally from the Chinese social media platform WeChat. The video shows employees furiously typing on their phones as uniformed police funnel workers into a room separate from the main office. The police also appear to be detaining employees during some kind of questioning. A photo shows an employee in a Gate.io hoodie. Another video shows police discussing WeChat messages, confirming that the office was indeed connected to Gate.io. The police do not appear hostile, and the employees appear to be cooperating.

Don’t Jump to Confusions.

Despite the relatively revealing videos, enthusiasts, traders, and reporters speculated on Twitter. @alicelacrypto, a crypto investment analyst, suggested that the raid had shut down the main Gate.io office and that the exchange was banned.

BREAKING: https://t.co/aM7aJZ7SMh got banned by Chinese police

(Thread) pic.twitter.com/1R9RsK0wv0

— Alice Crypto (@AliceolaCrypto) September 11, 2020

Despite some reports of slow withdrawals and interruptions in service, Gate.io remained functional. What’s more, other reports suggested that the office being raided was not a Gate.io office at all, but an outsourced public relations office. The license of the office, which appeared on the WeChat videos, is for Zhongshan City, Guangdong Province. Meanwhile, it was not immediately clear if Gate.io maintains an office there.

Kim Cheaters

Later, a Gate.io PR executive told BeInCrypto that police did visit a company office:

One of Gate.io’s offices was recently visited by the local police prefecture in China. Due to the price drop in KIMCHI, some users who had invested in the token experienced losses due to market volatility issues amidst the increasing buzz from DeFi. They decided to massively report the incident to local authorities.

Though some users might have had misgivings about the security of Gate.io in China, which has been hostile to crypto trading, KIMCHI’s demise was not the exchange’s fault.

To clear up speculation surrounding possible collusion, the representative said that Gate.io does not, “charge any listing fees,” so was not profiting from the listing of KIMCHI itself. Certainly, Gate.io did collect trading commissions. The representative went on to say that Gate.io fully cooperated with authorities. They also maintain that the incident was caused entirely by complaints by KIMCHI users who lost money and were looking for someone to blame. In the end, this raid appears to be more of an investigation than a crack-down. But it’s a reminder of the legal complexities exchanges face and the high risks users take when they base trades on hype.