Gate.io (Gate.io), global investor damage spread due to illegal activities

Gate.io Enters Domestic Market Amid Controversy Over Neglect of Customer Damages
Global Investors' Appeals for Damages Flood CEO Lin Han's Social Media
Lack of will to resolve damages, lack of a systematic customer protection system

It has been confirmed that investor losses due to illegal and unfair practices by the global virtual asset exchange Gate.io have been surging since the beginning of this year. A red light has been raised for the protection of domestic investors as the company entered the Korean market without resolving numerous cases of investor losses.

Cases of damage suffered by investors worldwide are being posted daily on the X (formerly Twitter) account of Gate.io founder and CEO Lin Han. As a result of reporting by Blockstreet since last April, it has been confirmed that while dozens of complaints regarding damages have continued on Gate.io founder and CEO Lin Han's X channel, all of the victims testified that "the problem has not been resolved."

Specifically, Gate.io committed acts such as arbitrarily locking customer accounts or suspending virtual asset withdrawals, manipulating virtual asset prices, and failing to provide compensation for investor losses and the disappearance of virtual assets in customer accounts due to unexplained trading system paralysis or errors. Furthermore, it was confirmed that the company manipulated the order book to display sell orders exceeding the actual token issuance volume on the blockchain, arbitrarily manipulated short selling prices in futures trading to induce forced liquidation of investors, and arbitrarily manipulated staked coin volumes, such as Ethereum (ETH), thereby causing investor losses.

Global Investors' Appeals for Damages Flood CEO Lin Han's Social Media

In an English comment posted at 3:43 PM on the 12th, following the record-breaking liquidation in the virtual asset market triggered by the dispute between U.S. and Chinese leaders over rare earths versus 100% tariffs on the 10th, the user claimed, "I entered a long position 15 minutes after the crash, but it was liquidated an hour and a half later as the value reset to zero. This happened even though there was no significant drop after the crash. This is theft."

The investors who have complained of damages come from diverse backgrounds. In a Chinese comment posted on the 18th, it was criticized that "while other exchanges like Binance and OKX issued new tokens and exchanged existing token holders 1:1 for UXLINK tokens due to the hacking incident, Gate.io alone reduced the exchange ratio by applying so-called 'weighting'," adding that "this is an admission that they are the most indifferent to protecting customer interests."

Various unfair practices ranging from allegations of ETF manipulation to the non-payment of event rewards

The damage caused by Gate.io is broadly classified into four types.
First is the controversy regarding losses related to ETF products. In a comment posted at 7:55 AM on the 12th, the user strongly criticized the situation, stating, "I bought an ETF when the spot market was rising, but instead suffered losses several times greater. How can I be compensated?" and adding, "The explanation regarding the ETF gate involves manipulating the figures they released at will, and it is a complete black platform that explains completely unrelated matters using sophisticated terminology."

Second is the issue of unpaid trading event rewards. A comment posted at 11:58 AM on the 10th expressed anger, stating, "The participation requirements for the Alpha Peak 3 and Hotcoin 4 events are the same and the durations are similar, but the Peak 3 rewards, which cost $300, were not paid, while only the $1 Hotcoin 4 rewards were distributed."

Third, there are suspicions of arbitrary manipulation of token value. As seen in the example of the English comment mentioned earlier, issues have been raised such as the value of a specific token being reset to zero and causing liquidation, regardless of normal market movements.


Fourth, there is the issue of duplicate listings and neglect with the same ticker. A comment posted at 9:40 AM on the 10th warned, "As Binance led the listing of the Chinese ticker 'Mimcoin,' three tokens with the same name suddenly appeared on Gate.io afterward. Unless duplicate names are removed, no one will use GateLayer."

As a result of Blockstreet conducting in-depth interviews with investors who disclosed their cases of damage on CEO Lin Han's social media, asking "Did Gate.io resolve the problem?", not a single person answered that it was resolved. This demonstrates that damage relief is virtually non-existent.


A Chinese comment from the 9th succinctly illustrates this situation. The comment, stating, "Do something substantive. Even the launch isn't working properly. Users have all left because of your incomprehensible management," demonstrates that trust in the exchange has hit rock bottom.

Full-scale entry into the domestic market accelerates as domestic exchanges integrate with the Travel Rule, intensifying concerns over secondary damages.

The problem is that Gate.io has already entered the Korean market while these cases of damage remain unresolved. As domestic cryptocurrency exchanges have included Gate.io in their lists of exchanges where deposits and withdrawals are possible, accessibility for domestic investors has increased.

"An industry official pointed out, 'The entry of exchanges into the domestic market without the prerequisite of resolving damages could cause secondary damages,' adding that 'thorough verification of entry by authorities and the establishment of investor protection mechanisms are necessary.'"

It is pointed out that investors need to exercise special caution when using the exchange, given that Gate.io's past unfair practices could be repeated against domestic investors.

The virtual asset industry unanimously agrees that, in the wake of the Gate.io scandal, stricter verification procedures are necessary for overseas exchanges entering the domestic market. In particular, key verification criteria are being presented to include whether existing damage cases have been resolved, the effectiveness of customer protection systems, and the functionality of dispute resolution mechanisms.

A lawyer specializing in virtual assets warned, "Even if it is an overseas exchange, if it provides services to domestic investors, it must be subject to domestic laws," adding, "In the current regulatory vacuum, investor losses are bound to continue."

Domestic investors need to carefully select an exchange based on this information and make efforts to ensure a safe trading environment. In particular, when using overseas exchanges, it is advised to be aware that remedies may be limited in the event of a dispute and to thoroughly verify the exchange's history and reputation.

Choi Joo-hoon joohoon@blockstreet.co.kr