- Accounting firm, Yoojin audit report – UPbit not involved in any fraudulent activity
- Investigation kicked off from lack of understanding about pooled liquidity
- Crypto market is expected to recover after KIU release official report
It’s always a thinking factor among cryptocurrency enthusiasts to understand what’s driving the price of these cryptocurrencies. For the present situation, there was an increasing pressure on the price of crypto last week, which was credited to this investigation on UPbit and Buffet’s skeptical comment on btc.
Since this raid was conducted in biggest exchange of South Korea, which owns the credit of playing a major part in the cryptocurrency industry. Definitely, such reports can instigate a massive sell-off of bitcoins and altcoins. Eventually, impacting the market as a whole.
What’s happening with UPbit?
UPbit, South Korea’s biggest crypto exchange has gained popularity in short span of time trading with a volume of $2 billion. The secret behind it getting public attention is its parent company, Kakao, biggest messaging app developer. The exchange was accused of conducting fraudulent activities with its executive suspected of doing embezzlement.
According to news outlets, country’s largest exchange was investigated for fraudulent behavior. In other words, though there have been some peculiarity on its trading volume and liquidity. Although those observations are true but such features can’t be indicative of misappropriation. Instead, it was a misunderstanding on the part of media to understand how shared ledger functions.
Essentially, authorities of Financial Supervisory Service (FSS), Korea Financial Intelligence Unit (KIU) and local police raided the headquarters of UPbit with the clue that they have been processing cryptocurrency trades without actually holding real user funds.
And they are accused of maintaining false order books without storing cryptocurrencies and pretended of keeping a huge chunk of bitcoin, ethereum, and other cryptocurrencies.
UPbit is sharing liquidity for a lot of cryptocurrencies with other exchange platforms. The pooling of resources helps in liquidity of all the trading platforms involved. To the people, who aren’t exposed to the backhand of the working, it might look like amiss when looked at an individual exchange, although it shouldn’t be marked as fraud.
Adding to that, some sources have even pointed out that UPbit trades with around 90 cryptocurrencies even though the exchange has listed 130 cryptocurrencies on the platform.
Users of 30 cryptocurrencies on the UPbit have not seen integrated wallets in their exchange. They cannot deposit or withdraw tokens directly to UPbit, rather they have to convert their assets to other digital currencies like bitcoin or ethereum prior withdrawing.
This lack of wallet support for cryptocurrency led to the authorities to raid and the government accusing UPbit of inflating its balance sheet.
Korea, Upbit: The irregularity being investigated is in regards to liquidity issue. The issue involves sharing/ pooling liquidity with other exchanges. It seems to be that the regulators did not understand the share liquidity. My source (an employee) claims there is no issue.
— Ran NeuNer (@cryptomanran) May 11, 2018
About The Investigation So Far and About Its Future
The audit report from the accounting firm, Yoojin, gives a clean chit to the exchange. Despite the ongoing investigation, UPbit has been fully functional, processing trades for its users. If there were indeed any fraudulent activity going on, UPbit would have been forced to suspend its functioning. To the contrary, UPbit has been functioning completely normal with high trading volume.
Based on the Yoojin report, it is highly likely that government investigation will end up with little issue of liquidity. And mostly, UPbit won’t suffer any serious consequences since this investigation was stemmed out of complex wallet structure. In short, regulators will be mostly looking out for UPbit functioning. Unfortunately, this entire situation was exaggerated through media, which eventually led to the selling of cryptos with no valid reason.
If UPbit investigation is the factor for the fall of the cryptocurrency market in the past week, then it is most likely to recover after the Korea Financial Intelligence Unit releases its investigation report. Already, South Korean cryptocurrency enthusiasts have gained confidence upon UPbit after the audit report of Yoojin was released.
Do you think UPbit investigation actually played any role in fall of cryptocurrency market? Comment your opinions below