South Korea’s largest cryptocurrency exchange has brushed shoulders with the law having been accused of falsifying balance sheets to deceive investors. According to investigators who raided Upbit, the exchange transferred customers’ exchange funds to separate accounts prompting suspicion of fraud activities. The raid carried out by ten investigators from the Financial Supervisory Service (FSS) was at Upbit’s Seoul head office taking away computers and balance sheets
The raid came as a result of a notable and a subsequent wave of massive withdrawals from the exchange. Earlier on, there had been a rumor that Upbit had listed Cryptocurrencies, which were not in the balance sheet causing an upsurge of panic.
Cryptocurrency markets impacted by Upbit’s raid
Apparently, the raid has not only affected the exchange but it has also impacted heavily on the cryptocurrency markets. Bitcoin’s price had been holding steady above $9,200 but when the news of the raid surfaced, the price sank to $8,538. This is close to 8% drop. Ethereum and Ripple were not spared either because they lost 10% and 16% respectively. Nonetheless, digital currencies with smaller market caps had the highest price drops.
Despite having a relatively small population, South Korea is the world’s third most significant for Cryptocurrencies. Millions of retail investors have continued to take a keen interest in the country even as government ups its game in scrutinizing the role of Cryptocurrencies in the economy. Meanwhile, UPbit has stepped out to quell the anxiety among investors and clients by confirming that it is cooperating with the prosecutors.
The cracking down on fraudulent activities in the digital currency market
It is clear that a majority of governments are in hot pursuit of any activities in the digital currency market suspected to be fraudulent. Earlier in the year, there were concerns over anti-money laundering (AML) by crypto exchanges’ corporate accounts in Korean banks. This impelled a joint investigation between the FSC and the Korean Financial Intelligence Unit (FoFIU).
CoinNest’s co-founder and chief executive Kim Ik-hwan has also been accused of embezzlement and fraud. The CEO was arrested after the Korean government provided regulatory guidelines for Cryptocurrencies in the country. Meanwhile, the government says it will continue cracking down on more obvious violations.