Korean Authorities Raid Upbit Exchange over Fraud Allegations

The largest Korean cryptocurrency trading platform is still operational.

by Marin Marinov
11 May • 3 min
In News

Korean authorities have raided the headquarters of the largest Korean cryptocurrency exchange Upbit, accrding to local media. The exchange is under investigation over fraud allegations by the Korean Financial Intelligence Unit (KIU), the Korean Financial Services Commission (FSC) and the Prosecutor's Office.

The authorities were tipped by a suspicious movement of customer funds to the accounts of Upbit executives, local media Chosun reports.

“We have secured hard disks and accounting books through confiscation. Analysis is expected to take days,” the Prosecutors' Office has explained.

The investigation

Upbit investigation began with police raid of company headquarters on Thursday and expanded with KIU and FSC officers search on Friday. Meanwhile, the main cryptocurrencies suffered substantial losses with Bitcoin (BTC) dropping more than 8%, Ethereum (ETH) – over 11%, Ripple (XRP) and Bitcoin Cash (BTH) went down 16% and 20%, respectively, accroding to Coins.Online data as at 02:00 UTC.

one hand with touch screen

Clients assets are safe and transactions and withdrawals are still available, the Upbit said in a message to customers.

“Upbit is currently under investigation by prosecutors and is cooperating,” the company said.

Dunamu, the owner of Upbit, logged KRW 211.4 billion in sales and KRW 198.3 billion in profit for the three months after its launch in October 2017, local company Vidente Co has estimated.

In March, Korean authorities raided the offices of three cryptocurrency exchanges again on fraud allegations, including Coinnest. Seoul’s Police Department and the Prosecutor's office found that customer funds were sent to the personal accounts of executives at Coinnest and therefore arrested its founder Kim Ikhwan.

Crypto in Asia-Pacific

Asia-Pacific is a hotbed for cryptocurrency and blockchain. Both China and South Korea tightened their grip on digital currencies last year, when China went as far as banning crypto coins trading. On the other hand, Japan officially legalized cryptocurrency exchanges that prompted several trading platforms to move to Tokyo. However, following the USD 530 million Coincheck hack in January, Japanese Financial Services Agency (FSA) initiated inspections and ordered several crypto exchanges to make security improvements.

Binance, the largest virtual currency trading platform according to Coins.Online, has announced plans for a Maltese office after FSA warned it for operating in the country without a proper registration and license. Tokyo-based OKEx, another major exchange, also decided to open an office in the EU member state as “a foundation for further OKEx growth” because of the Maltaese government’s friendly cryptocurrency and blockchain strategies.