Korean Regulators Widen Investigation of Cryptocurrency Exchanges

South Korea widening its Probe on Crypto Exchanges

Bitcoin price (BTC/USD) remains below $9000 following Upbit news

One major argument by the regulators are the corporate accounts are majorly used for money laundering.

Last week, reports surfaced that the biggest cryptocurrency exchange in South Korea, UPbit, had been raided with a number of assets seized, on a warrant executed due to suspicions of fraudulent activities taking place within the exchange.

After South Korea's announcement in March 2018 about its intentions to probe the thriving cryptocurrency-exchange business, the country is now urging global prosecutors to join them in strengthening the investigation, alongside introducing global policies. South Korean news outlet called the Korean Times cited an official of the Financial Service Commission (FSC) this past Sunday stating: "Following a request by the Financial Supervisory Service (FSS) and the prosecution to address growing anti-money laundering compliance concerns and possible abuse of cryptocurrencies in money laundering and fraud, the FSC is looking into exchanges' corporate accounts opened in local banks".

Though a circular issued by the government at the end of January mandated the use of real-name system for crypto transaction and not to use corporate accounts, statistics shows that out of all the crypto accounts only 30% of them had been converted into real- named accounts in so far.

As it stands, we can't actually say if UPbit have been falsifying their accountancy sheets, or if this really is a part of a bit misunderstanding, overall though trading on UPbit is still active and thus, it can be argued that customers still have a belief in the UPbit exchange. There are only up to six banks in South Korean have the expertise to issue out real name accounts. Nonetheless, not all accounts at these exchanges have been converted into real-name ones. That leads to other small and medium-sized exchanges to continue using corporate accounts for crypto transactions. One example of such action is with the CEO of Coinnest, who was charged with embezzlement. Even after it has been converting into real name accounts. A discussion on the collaboration with other countries in regard to the crypto regulations had been in South Korea's agenda for a while.

Early reports allege that the exchange committed fraud by changing their balance sheets in order to deceive investors.

The publication also said that the prosecutors had secured computer hard disks and accounting books of the company and planned to investigate whether Lee Suk-woo, representative of the company behind Upbit, was involved in the matter.

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