South Korea’s biggest cryptocurrency exchange, Upbit, was investigated by local police and 10 investigators for alleged fraud as reported by Chosun, South Korea’s largest media outlet.
Upbit is currently the fourth largest cryptocurrency exchange in the world on the basis of 24-hour trade volume. The exchange is run by a subsidiary of Korean tech giant, Kakao.
According to Chosun, Upbit’s headquarters in Seoul were raided on May 10 by local police and 10 investigators from the Korean Financial Intelligence Unit (KIU) and Korean Financial Services Commission (FSC). The authorities seized the offices for further investigation over fraud and money laundering allegations.
Police and authorities believe that the exchange deceives investors by faking its balance sheet. Upbit is also said to suspiciously moving funds from the exchange (clients’ wallets) to the personal accounts of its executives.
The cryptocurrency community in South Korea and around the world believe that Upbit should not have committed the crime as the cryptocurrency exchange has been generating hundreds and millions of dollars in profits on a quarterly basis since early last year.
The investigation into Upbit is still going on and the authorities have yet to finalize and release their report on the matter.
“We have secured hard disks and accounting books through confiscation. Analysis is expected to take days,” stated the authorities adding that the final report on the incident will be released upcoming week.
Meanwhile, Upbit’s development team stated that the exchange is still running and it would continue operating until a notice is issued by the local police.
“Upbit is currently under investigation by the prosecution, and we are working diligently. Upbit services such as all transactions and withdrawals are operating normally. Your assets are kept securely in your account, so you can rest assured that you can use Upbit services,” the Upbit team stated.
In light of what the South Korean authorities did to Coinnest for fraud charges, if Upbit is proved guilty, it could either be permanently or temporarily closed down.
CEO of Coinnest, a major South Korean cryptocurrency exchange, was arrested last month for allegedly embezzling funds belonging to customers. Local police and investigator, after discovering that customers’ funds were moved to personal accounts of Coinnest executives, immediately arrested the president of the exchange.
Coinnest is still operating after its board announced that the executive team had been replaced.