Last week the financial regulators from South Korea had started an investigation on the cryptocurrency exchange UpBit suspecting that the company is conducting fraudulent activities. In a new report, the authorities have cleared the fraud allegations against the exchange.
The company [Upbit] is suspected of transferring customer funds from their cryptocurrency exchange account to a representative or executive account…Korean prosecutors have conducted search and seizure against the nation’s largest cryptocurrency exchange, Upbit, on charges of fraud.
The cryptocurrency market saw a visible depreciation due to the massive action against UpBit. The Financial Intelligence Unit along with the local authorities from Seul have stormed in the headquarters of the exchanged and seized the hard disks and the accounting books.
The local media has reported that the authorities were suspecting the exchange of committing crimes like coinless transactions, leakage of money on US trading platforms, insider trading, money laundering and more.
Lee Seok-woo, the president of Dunamu Inc. and owner of Upbit, disclosed that the investigation dismisses the suspicion of book-trading. He told the local news that in March 2018, Upbit was suspected of “only book transactions without coins.”
“I have been notified that the amount of coins is 100% identical to the number of coins in the wallets,” added Seok-woo.
The exchange explained to the authorities that it uses unique wallets for storing the cryptocurrencies and different wallets for deposit and withdrawal. It also revealed that they keep the cryptocurrencies without depository wallets in a storage wallet that can be withdrawn with its affiliate, Bittrex, and another undisclosed third party.
The exchange representatives have stated that the situation was based on lack of communication and that it’s a huge misunderstanding. Upbit went on and said that the suspicions were unfounded and that the authorities might be confused by the transactions that are being made through its US branch Bittrex.
The news came as a shock through the crypto community since not long ago UpBit announced a campaign against frauds and scams.
In March Upbit launched a reward program for users who can identify and report cryptocurrency frauds. The cryptocurrency exchange is still rewarding anyone who communicates Ponzi schemes or other illegal activities with $930.