Published: Sun, May 13, 2018

South Korea's largest crypto exchange faces fraud investigation

South Korea's largest crypto exchange faces fraud investigation

Upbit is now the fourth largest cryptocurrency exchange in the world by 24-hour trade volume. As at press time law enforcement remains at the exchange and have seized hard drives and accounting records. The South Korean Financial Supervisory Service did not immediately respond to CNBC requests for comment after local business hours. The company partnered with Bittrex, one of the world's largest cryptocurrency exchanges, to launch Upbit previous year.

Ran Neu-Ner, the host of the Crypto Trader show on CNBC Africa, has confirmed the cryptocurrency market is being drained as concerned users take their funds out of the Upbit exchange.

Authorities searched the upbits's offices on Thursday and Friday, according to an official from the Seoul Southern District Prosecutors' Office, who asked not to be identified citing office policy.

"The company will cooperate faithfully in prosecutors' investigation", said Upbit in a statement released Friday.

Reports indicate that the trading platform is suspected of fraudulent activity over inaccurate representations that it allegedly made regarding the amount of cryptocurrency it has in its possession. UPbit services such as all transactions and withdrawals are operating normally.


Since its inception in October 2017, Upbit's image hasn't' been all clean as in December, the crypto exchange became the center of the controversy when it didn't join other exchanges to support self-regulation.

In March, the FSC and the Korean Financial Intelligence Unit (FoFIU) announced a joint investigation into crypto exchanges' corporate accounts in Korean banks, over fears of anti-money laundering (AML) compliance concerns.

Several analysts agree that the UPBit exchange raid was behind the falling prices today. Finally the third down trend came with the announcement of the raid on the South Korean exchange.

Last month, another exchange, Coinnest, was investigated for charges of embezzlement and fraud, and their chairman, Kim Ik-hwan was detained.

"As the market continues to mature, these events should grow fewer and farther between, and investors will grow thicker skin".

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