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Investigation of South Korea’s Largest Crypto Exchange Upbit Continues

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Since the South Korean prosecution started investigating Upbit, the country’s biggest cryptocurrency exchange, greater activities have unfolded. While neighborhood media nonetheless talk about allegations and elevate questions about Upbit’s enterprise practice, some human beings consider that Upbit is already in the clear. The investigation continues.

The Allegations

Local media stated on Friday that South Korea’s largest cryptocurrency exchange, Upbit, is beneath investigation for alleged fraud. More statistics has surfaced since, casting doubt on whether or not the allegations can be considered fraud. No fees have been filed in opposition to Upbit at the time of this writing. However, the prosecutors have confiscated the exchange’s computers and files as phase of the investigation.

On Monday, News1 Korea described: Prosecutors searched Upbit for fraud fees prompted via coinless transactions, suspicion of insider trading at some stage in the list process, and allegations of cash laundering and leakage of cash thru US buying and selling sites.

Liquidity Issue

The first allegation, the most heavily scrutinized, concerns the liquidity of some of the cash listed on Upbit.

The exchange currently lists 137 cryptocurrencies however now not all of them have wallets. South Korean prosecutors are accusing the change of “book-trading” the place Upbit helps the trading of cryptocurrencies besides without a doubt having the coins in its possession. Joongang Ilbo elaborated: Of the greater than one hundred thirty cryptocurrencies presently traded on Upbit, about 40 do now not aid e-wallets.

News1 also pointed out that there is a point of view among investigators that if users request a switch or withdrawal of their coins all at once, then Upbit will not be able to return their money immediately, which would render the authentic transactions fraudulent.

However, some argue that “most home buying and selling sites are adopting this method” without those that manage a small number of cryptocurrencies such as Bithumb, the news outlet conveyed, including that if this approach is determined to be an “apparent fraud…[then] the enterprise will not be tons affected.”

Upbit Calls It a Misunderstanding

Upbit says that this investigation is “something that comes from misunderstanding,” Joongang Ilbo reported.

The change has again and again disregarded the above accusation, emphasizing that it will impervious the needed cryptocurrencies as quickly as it has brokered a transaction for the coins besides a wallet, the information outlet detailed. In addition, Upbit insists that it has “never bought or bought cryptocurrencies that it did no longer personal considering that it opened closing October.”

Furthermore, given Upbit’s distinctive partnership with the US change Bitrex, crypto experts believe that “the lack of grasp of the Upbit trading gadget that links the machine with the foreign places trade has led to the suspicion of book trading,” the publication emphasized, adding: Cryptocurrency traded in KRW is at once managed via Upbit, and when customers buy different digital currencies…transactions are made through Bittrex beneath the accountability of Upbit.

A consultant of any other crypto exchange explained that barring for the gained market, Upbit transactions are made through Bittrex. “It is a legit e book deal, and the prosecutors seem to have misunderstood why they are selling cryptocurrencies that they do no longer have.”

Previous Internal Audit

Another component at play is an article posted through Money Today on Tuesday, referencing an inner audit which reportedly befell in the past this year. The information outlet quoted Lee Seok-woo, president of Dunamu Inc. which operates Upbit, saying that “In early March, when Upbit was once suspected of only [conducting] book transactions barring [holding the] coins…I have been notified that the quantity of coins [in the books] is 100% same to the number of coins” in the wallets.

Referencing the above article, Twitter consumer Crypto of Korea wrote, “Upbit claimed that they had the internal account audit…The audit indicates that one hundred percent of the cash are real, the ledgers all synced to their very own wallets.”

Some human beings because of this took Upbit’s claim as the exchange being clear of wrong-doing in this contemporary investigation, while others continue to be greater objective. Twitter consumer Nash wrote, “Not concluded yet. It’s just “Upbit’s claim.” Meanwhile, Korean media still increase questions about Upbit’s operations and are seeking for extra answers at the time of this writing.

Insider Trading and Money Laundering Concerns

The prosecutors are also reportedly looking into allegations of insider trading and money laundering surrounding Upbit, News1 Korea wrote, noting that “some investors have raised strong suspicion that there is insider trading” at the exchange. “It is suspected that a character who receives data from an Upbit employee about an upcoming listing [on Upbit] would have sold the cryptocurrency from [an] overseas trading web site and bought on Upbit.”

Furthermore, the investigators alleged that “illegal enterprise dollars are more without problems transferred from the domestic [exchange] to the US due to the linkage with Bittrex,” the booklet described.

As for any fraud charges, a legal professional was once quoted by means of the news outlet commenting: It is hard to choose it as a fraud because there is no victim. If the capital market law applies to the transaction web site [Upbit], it is a criminal offense. The lack of a clear baseline law is a greater problem.

Joongang Ilbo in addition asserted that according to the role of the country’s monetary regulators, “cryptocurrency is no longer concern to the Capital Market Law because it is now not a financial product.” In the unlikely event that the prosecutors can apply the Capital Market Law to this case, commissions through book transactions would be regarded criminal proceeds, the information outlet explained.

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