[Korean Exclusive News]
Author: Shin Yi Jin, South Korea
The credibility of the greatest exchange market of Korea, UPbit, is being questioned with the ongoing seizure and search investigation for suspicion of fraud.
The investigation hit the company for 2 days from 11 to 12 May. The fact that the company was being suspected of a fraud case has brought a huge shock to the industry.
When an investor purchases a cryptocurrency, the exchange markets stocks it in a digital wallet. Then, the investor is able to transfer it to other exchange market’s digital wallet or withdraw it in cash.
However, UPbit has had much fewer digital wallets as compared to the transacted cryptocurrencies and this led to a constant suspicion of a ‘Book deal’ of the cryptocurrencies instead of stocking them up in the digital wallets.
The users of UPbit also had to experience inconvenience of not being able to transfer the purchased cryptocurrencies to the digital wallets of other exchange markets.
The fact that UPbit is one of the largest companies in the country is adding on to the shock in the industry. This is because there has been an understanding that large exchange markets are relatively safer than the smaller ones after the arrest of the CEO of Coinnest, a SME exchange market in Korea.
With the news of the investigations, there has been a phenomenon of dumping in the cryptocurrency market. Bitcoin has fell by about 10% within 1 hour between 3.30pm and 4.30pm on 12 May. Another leading cryptocurrency, Ethereum, experienced a fall by 18.6%. Others such as Ripple (-20.9%) and (-17.0%) also experienced a huge fall within the 1 hour.
The trend of declining price of cryptocurrencies is happening in the international markets as well. According to coinmarketcap.com, Bitcoin experienced a 6.9% fall and Ethereum fell by 9.6% in the 24 hours from 11 May to 12 May.
Investors are keeping a lookout on the result of the investigations and its impacts on the market.
UPbit has tried to resolve the situation by announcing that they are “sincerely cooperating with the invesgations” and that “all transactions/deposit/withdrawal services are being executed as per normal and users’ capital are safely kept in their accounts.”
The company also noted that “the smaller number of digital wallets as compared to the amount of cryptocurrencies is a saying of the past and the number of digital wallets have largely increased now.”