The leaders of UPbit, one of the largest cryptocurrency exchanges in South Korea, are officially accused by the country's prosecutors of misconduct with corporate transactions – as reported by CoinDesk Korea.
According to a report by CoinDesk Korea, published on Friday, December 21, the Seoul Southern District Prosecutor’s Office accused three senior officials, including the founder, Song Chi-Hyung, of fraud.
UPbit cryptocurrency exchange is under investigation
It is assumed that executives committed fraudulent transactions from September to December of last year using a fake corporate account. Frauds were made to make fake orders to increase the popularity of the platform. The total amount of transactions amounted to 254 trillion won (or 226.2 billion dollars).
According to law enforcement agencies, remittances were necessary to inflate the figures for tradingTrading
– is an economic term that means the process of independent trade, independent analysis of the market and the conclusion of trade transactions.Details volume and attract more customers to the exchange. The founder and management are also accused of selling 11,550 Bitcoins to customers in orderOrder
– automatic application to buy or sell cryptocurrency. Orders are used during trading on the stock exchange to open and close a position. Details to get 150 billion won (or $ 133.8 million) through falsified transactions.
However, on the UPbit website, the charges were refuted and stated that: "(...) The cryptocurrency exchange provided liquidityLiquidity
– is a term that means the ability to sell any financial assets (below or above the market price). The term “liquidity” in Latin means “liquid”, “flowing”.Details to the Company's corporate account in order to stabilize the trading market at the beginning of the service opening. This is the period from September 24, 2017 to December 11, 2017 (...) the corporate account does not have a withdrawal function." – upbit.com
The exchange further stated that it could not be blamed for this process, although it acknowledged that it had performed some transactions early in marketing for about two months. The transactions did not affect the market, according to UPbit management, and accounted for about 3 percent of the total trading volume at that time.
Recall that back in March, prosecutors searched the UPbit head office in the Gangnam-gu area, seizing hard drives and accounting ledgers. At that time, the exchange was suspected of fraud due to the alleged sale of cryptocurrency to customers, which it does not actually own.
"To protect customers from rapidly changing market prices and stabilize their domestic market, the company provided liquidity using physical assets held by active accounts at around 2 to 2 billion won (...) The prosecutor’s statement (under article 254) did not takes into account the fundamental characteristics of the provision of liquidity, namely the cancellation of existing orders and the filing of new orders in response to changes in market prices" – Sun Chi-Hyung.
Now the leadership of UPbit, the South Korean stock-exchange, is accused of fraudulent actions, while the meeting of prosecutors intends to begin the court sessions on "illegal transactions."
Recall that the South Korean government is increasingly taking measures to regulate the crypto-sphere since the beginning of the year 2018. In January (2018), police and tax authorities in the country searched the Bithumb and Coinone exchanges. The search took place against the background of an investigation into alleged tax evasion.
Editor: Yuliya Soroka