Business & Finance

South Korea’s Biggest Exchange Upbit Is Back In Business

On May 11, 2018, the biggest crypto exchange in South Korea, Upbit was raided by local authorities under the suspicion of balance sheet manipulation and inflated volumes. At the time, Financial Services Commission (FSC), the main financial watchdog of South Korea, and the Korea Financial Intelligence Unit (KFIU) secured the hard disks and accounting book of Upbit to evaluate claims from unknown sources that the exchange is insolvent.

As part of the raid South Korea’s financial watchdog, the Financial Services Commission (FSC), along with the Korea Financial Intelligence Unit (KFIU), seized hardware and documents from UPbit to evaluate claims from unknown sources that the exchange was insolvent. Forbes

There were concerns about Upbit, manipulating its balance sheet and inflating its trading volumes. South Korea has been cracking down on the cryptocurrency industry to combat excessive speculation and illegal activities such as money laundering. Over the past few months, Korean authorities have raided several smaller crypto venues, outlawed initial coin offerings and banned minors, foreigners and financial institutions from domestic exchanges. On May 11th, experts noted the already-skeptical attitude adopted by the authorities before the raid.

Before the clampdown, South Korea was something of a ground zero for the global crypto-mania. Volume on local exchanges soared at the end of last year, with Bitcoin and other tokens fetching large premiums in the country relative to international markets. The boom alarmed officials including Prime Minister Lee Nak-yon, who said that cryptocurrencies might corrupt the nation’s youth Bloomberg, May 11, 2018

Audit and evaluation

Yoojin is one of South Korea’s largest accounting firm that was hired for the audit, to evaluate Upbit’s accounts and to validate the holdings of the exchange and company’s balance sheet. Upbit, the biggest crypto exchange in South Korea, came out clean in an audit report which proved the exchange had 100 percent of the amount its balance sheet demonstrated but questions remained over the legitimacy of the findings as the Korean government did not release a statement or additional information on the case. On May 15, Yoojin officially cleared Upbit, concluding that the holdings of Upbit exactly matched the amount of funds listed on its balance sheet. Upbit has been fully operational and continued to process trades for its users. Based on the audit report of Yoojin, it is highly likely that the government investigation into Upbit will end with a simple issue in liquidity and if the report of Yoojin is accurate, Upbit will not suffer from any consequence from the recent case as it stemmed from a simple misunderstanding of Upbit’s wallet structure.

Since early 2018, UPbit created snapshots of its multi-signature wallets and funds stored within them for auditing purposes. Yoojin accounting firm, a major accounting firm based in Seoul, confirmed that all of the funds on the UPbit platform match the cryptocurrency holdings of UPbit stored in its multi-signature wallets.

Official dunamoo report

An official report(Translated) from, Dunamoo, a subsidiary company of Kakao, South Korea’s main internet conglomerate that operates KakaoPay, KakaoStock, KakaoTaxi, KakaoTalk, and KakaoStory, has released a report citing the official audit results released by Yoojin. Something that goes a long way to verifying Yoojin’s findings — and somewhat laying to rest fears of another South Korean crypto exchange collapse.

UPbit currently has the exact amount of money held by the platform’s investors along with additional funds, more than enough to compensate every investor, Hence, UPbit is able to process withdrawals for customers upon the request of its customers and the exchange will continue to release audit reports on a regular basis to prove its solvency.

The report of Dunamoo emphasized that Upbit holds 100 percent of user funds and 27 percent more than the cryptocurrency holdings of its investor, more than enough to reimburse every user on the platform.

Due to the problems for South Korean crypto exchange Bithumb in recent months that exchange was unable to process deposits and withdrawals for over a month, has led to Upbit overtaking it as the largest exchange in the country, though Upbit might not hold the title long. Many investors expect Gopax, a cryptocurrency exchange that is backed and invested by the country’s second largest commercial bank Shinhan Bank, to lead cryptocurrency exchange market of South Korea in the upcoming months.

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Muhmmad Furqan

Furqan is a financial markets expert. A regular trader of cryptocurrencies and hold some investments in Bitcoin, Stellar, IOTA and OST. Contributes with latest industry insights. Email: furqan@blockpublisher.com or contact the editor at editor.opinions@blockpublisher.com

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