Cobinhood & DEXON Endgame — A FAST Exit Scam or a SLOW Decadence fuelled by humongous mismanagement.

6 min readJun 17, 2019

The appearance of a multitude of conflicting articles deserves an impartial writeup about the facts shrouding Cobinhood & DEXON Endgame.

Background — Cobinhood, founded in 2017 “was” the most well-recognized cryptocurrency exchange/ digital asset platform based out of Taiwan. The exchange had its own platform, utility token (COB) and an ICO consulting agency. But perhaps the most exciting part is that they had zero trading fees for an exchange and still profitable, due to the various options for its COB utility token [1]. The exchange itself was quite highly rated amongst its peers by various agencies including Coinintelligence before being recently downgraded [2]. Sometime in 2017, the developers behind Cobinhood team decided to build a new protocol, DEXON for achieving higher TPS and solving scalability issues. They raised over 20 million US$ in private investments and 3.5 million US$ in IEOs performed on Cobinhood (3 million US$ raised) and LBank (500K US$ raised).

The DEXON platform itself is operational and also supports a few DApps on it as well. Besides, DEXON Foundation is a non-profit organization and an open resource hub for blockchain enthusiasts and experts alike [3]. This implies that it is neither controlled by Cobinhood or its parent company and supposedly would not be affected by the fate of Cobinhood or its parent company itself. But since the team of Cobinhood and DEXON were overlapping, the final consequence is still debatable.

It all started a few months back when DEXON raised 3 million US$ at 0.2 US$/ token from users in Cobinhood, during March 27 — April 3, 2019 [4]. It was quickly followed by a raise of 500K US$ at 0.15 US$/ token in LBank, on 25 April 2019 [5]. Naturally, the lower prices offered at LBank (0.15 US$/ token) compared to its price on Cobinhood (0.2 US$) enraged and frustrated the users and private investors alike.

On its defense, the management tried to take measures for damage control by introducing new features for its COB token holders [6] and claiming that the second IEO was done to acquire more users (as they limited the maximum purchase to a single user to 500 USDT only); but its failure to nail down this disastrous decision to any one person proved its undoing. The damage was already done and cracks appeared in the Board of Cobinhood — DEXON.

Things came to such a state that one of the founders was eased from his position and the employees of Cobinhood — DEXON were stopped from attending their swanky office in the iconic 101 building in Taipei, for a few days in early May. It was reported that the co-founder was forced to leave the company due to “emotional instability and liable personal behavior”. The situation was quickly resolved and everyone resumed their position, things started to return to normalcy. Alas! It was only a temporary relief, akin to the calm before the storm as out of nowhere the co-founder & majority stakeholder unilaterally ordered liquidation and dissolving the parent company — Cobbingham Digital Finance Co. Ltd. According to sources, the majority of the board members are still opposed to this, but I guess legally they cannot stop the liquidation process even if they so desire.

Just in case you were left wondering what worse could happen. To add salt to the self-inflicted injury, IVP group (investors in the parent company) reported one of the co-founders to the district attorney in relation to embezzlement of funds and other issues. The matter is sub-judice so I refrain from commenting further. A copy of the filed report is attached below along with the Chinese articles reporting the case [7,8].

All these points indicate that there is a huge rift in the management team and the current steps to fire all the employees and liquidate the parent company is more of a reaction to the above chain of events that happened rather than a simple cause of bankruptcy and SCAM. It’s even worse than a scam in some aspects as the whole incident transpired due to the rift among the management team and nothing more.

Facts:

1. Cobbingham Digital Finance Co. Ltd. the parent company for Cobinhood has filed for bankruptcy and liquidation (Nothing to do with bankruptcy and everything to do with conflict of interests among board members as per sources).

2. The contracts of everyone from Cobinhood and DEXON has been terminated i.e all the employees have been fired.

3. A professional and legal entity (third-party) is being hired for the process of liquidation and dissolving the company, the final results would determine the survival of Cobinhood Exchange. Indirectly, the outcome affects DEXON Foundation as well.

Allegations:

1. “Cobinhood and its DEXON Foundation have left investors in the dust by pulling an exit scam.” While institutional investors might still get some relief, it’s the retail investors who have been left to hang dry by this untimely and distasteful liquidation. The Cobinhood Exchange and DEXON projects have been operating quite well and in fact as of today (May 23, 2019), both are live and operational. The fact that the company folded due to internal strifes and failed to live up to its reputation cannot be compared to a real SCAM; nonetheless, the future of Cobinhood is at stake.

2. “After unlocking DEXON’s coin (DXN) today, it proceeded to dump it on the market en masse.” Only around 37K DXN tokens were sold without a stop loss that triggered the price fall of DXN tokens. As explained earlier DEXON Foundation is a non-profit organization which shared the same technical team members as Cobinhood. The following reply quashes these claims as well.

3. “DEXON: Another Glorified Whitepaper” The DEXON platform is fully operational with the relevant DApps functioning on it. The DEXON project is an open source project so there is still some hope for salvaging the DXN token and overall project.

To summarize, the whole incident stinks and it’s undeniably bad! But hopefully all is not lost for DXN token holders and one of the users in the DEXON group aptly sums it up -

There is a high probability of complete liquidation and dissolving of Cobinhood, which might have damaging consequences for DEXON project as well both in the short as well as long term. But definitely DEXON wasn’t a run of the mill crypto SCAM as suggested by some reports [9–14]. As, the outcome of the bankruptcy isn’t clear yet, it’s premature to say if Cobinhood will be able to reinvent itself under a separate team & management or disappear and be treated as an exit SCAM. No one knows for sure what exactly is in store for the DEXON Foundation as well. But no matter the outcome, the whole incident is bad for Crypto’s reputation in general and bad for Taiwan in particular, as a place for serious crypto and blockchain investments.

References -

[1]https://christianott.co/cobtoken_en/

[2]https://www.cointelligence.com/exchanges_list/cobinhood/

[3]https://dexon.org/faq/foundation-what-is-dexon-foudation

[4]https://medium.com/dexon/how-to-acquire-dexon-coins-public-sale-297395d058c7

[5]https://medium.com/dexon/how-to-acquire-dexon-coins-ieo-2afc25f50478

[6]https://medium.com/cobinhood/cob-token-upgrade-new-benefits-for-you-c0bd76aea800

[7]https://www.bnext.com.tw/article/53288/cobinhood-ceo-cofounder-ivp-dispute

[8]https://www.cw.com.tw/article/article.action?id=5095136

[9]https://cryptovest.com/news/cobinhood-exchange-to-close-down-alongside-dexon-dxn-coin-crash/

[10]https://www.financemagnates.com/cryptocurrency/news/rumors-of-bankruptcy-exit-scam-swirl-around-cobinhood/

[11]https://beincrypto.com/cobinhood-exit-scams-after-raising-3m-last-month/