South Korea's largest cryptocurrency exchange under investigation for fraud

South Korea widening its Probe on Crypto Exchanges

The Bitcoin price (BTC/USD) has stayed below the $9,000 mark in the past couple of session, as market sentiment has remained dampened following last week's news that South Korea's largest cryptocurrency exchange, Upbit, had been raided by local prosecutors.

Some of the country's best financial regulators partnered up with prosecutors to widen their investigation of local cryptocurrency exchange operators.

As reported in The Korea Times on May 14, 2018, the country's central financial authority, the Financial Services Commision (FSC), wishes to "coordinate" policies about crypto-assets with global regulatory bodies.

The creation and use of corporate accounts for cryptocurrency transactions should have ended since the end of January after the government had put a ban on it. But the fact also remains that many accounts in the said exchanges are yet to be converted to real-name accounts.

However, the major six banks that had the ability to issue real- name accounts has not used it potential and instead choose only to provide service for the largest crypto exchanges, such as Coinone, Bithumb, Korbit and Upbit.

Overall, UPbit are accused of accounting for currencies that they did not have and did not store.

The regulators say that the use of corporate accounts can lead to fraud such as recently seen with whose CEO was charged with embezzlement. In addition, all small and medium-sized exchanges continue to use corporate accounts for crypto transactions. Regulators are suspicious with one of the largest cryptocurrency exchange by volume Upbit, therefore leading to an investigation against them.

What do you think of the Korean regulators widening probe on crypto exchanges?

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

The FSS examines and supervises financial institutions but with the oversight of the FSC. A discussion on the collaboration with other countries in regard to the crypto regulations had been in South Korea's agenda for a while.

Suk-heun states that regulations governing blockchain projects and cryptocurrency trading shall be eased, as cryptocurrencies exhibit "some positive aspects".

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