The Korea Times reported that South Korea’s top financial regulator FSC (Financial Services Commission) had filed accusations against three employees of one of Asia’s biggest cryptocurrency exchange “Upbit.” Founder of Upbit Song Chi-Hyung along with the three executives are charged for manipulating its order book and making fraudulent transactions between September 2017 and December 2018 by prosecutors in Seoul District. The senior executives of Upbit are accused of manipulating trading figures by using the fabricated corporate account. This was done to attract more clients to cryptocurrency exchanges of South Korea. All three employees have not been detained but indicted as a part of investigations.
FSC Official said “I’m worried about investors who may lose money in this market because of exchanges like Upbit. We need a way to make the market and the industry fair and transparent.”However, Upbit has reportedly declined to accept the allegations and describing the findings to be completely false. It has also stated that “Upbit, as a corporate body, has never liquidated any assets acquired via fraud or used fraudulent assets to make further transactions” but it assured to cooperate with the investigation.
According to the Financial Services Commission of South Korea, the employees made use of a bot to mold the data processing system which inflated the figures of trading volumes. Upbit also argued that cross trading took place but had not influenced MRP and was for the benefit of consumers:
“For about two months after launching the service, some cross trading took place for marketing purposes. However, such trading did not influence the market price, and the volume of such trading took up about 3% of the total trade volume at that time.” Initially, because of the liquidity lack, the spread was high between buying and selling orders. Therefore, it was important to match the global price to facilitate trading. And thus, this was the only purpose of employing a technical approach i.e., cross trading was to inject liquidity.
Upbit was raided by both Korean Financial Intelligence and Financial Services Commission for fraudulent trading, inflated volumes and manipulation with balance sheets. Post six months of the raid the cryptocurrency exchange “Upbit” employed Yoojin, a South Korean account firm. And Yoojin concluded that there was no manipulation with the balance sheet. And therefore, South Korean prosecutors now seem to believe this.
Early in this week, other Korean exchange Bithumb also abandoned such findings according to which company had manipulated its stats of trading volumes.