Precisely one week ago we reported how South Korea’s largest cryptocurrency exchange, Upbit, is being investigated by police. Since then, the company’s officials have been in defence mode after the raid on May 11, which resulted in an internal audit meant to prove that Upbit wasn’t engaged in any wrongdoing.
As expected, the exchange’s officials have worked quickly in trying to repair the damage that has been done, including the company’s reputation. The primary aim was to conduct the internal audit which would prove to both government prosecutors and clients that the top-rated firm was not, in fact, stealing from any of its clients.
Following up on that decision this article will highlight how the exchange’s officials have been continually trying to keep track of things, and the steps taken to deny any criminal involvement.
The Audit’s Results
Following the audit we were mentioning above, it appears that its results entirely disprove the allegations that they have been untruthful or hiding information concerning their finances. Moreover, not only did the company leap into action in order to calm current and potential investors, but they also sent out notices in which they stressed how Upbit was fully cooperating with prosecutors in proving their innocence.
Officials also stressed that the exchange’s clients’ assets were secure, and thus the allegations concerning money laundering and insider trading should soon be dismissed. Plus, no official charges have been filed, and yet prosecutors have decided to seize computers and other data during the May 11 raid. In a statement released not long ago, company officials said the following:
“The exchange has never bought or sold cryptocurrencies that it did not own since it opened last October”.
Shifting the blame
While we can understand the pressure and stress felt by Upbit, not everyone was thrilled about the company’s decision to shift the blame onto Bittrex, the platform through which most of its transactions are completed. This might also be the reason that led to the misunderstandings over its operation, officials claim.
But, we now know that a separate digital wallet is used to store cryptocurrencies, and that is entirely separate from withdrawals wallets and deposits. What’s more, the secure storage wallet in question can only be withdrawn together with Bittrex and a third party, meaning that Upbit could have never acted alone in stealing from its clients.
Lee Seok-woo, president of UPbit’s parent company Dunamu, reportedly claimed to a local news outlet that the internal audit conducted should entirely dismiss the suspicion of fraud, including book-trading and other similar allegations. He went on to state that:
“In early March, when UPbit was suspected of only book transactions without coin […] I have been notified that the amount of coins is 100% identical to the number of coins available in the wallets.”
The consequences of the Raid
Before the news went viral, the price of Bitcoin was coming closer and closer to the $10,000 mark. But, the raid which was conducted by the Korean Financial Intelligence Unit (KIU), the Seoul Police, and the Financial Services Commission, spooked both investors and crypto enthusiasts –who did not know how to react to the news.
Naturally, Bitcoin’s price dropped, and it fell badly, around 9%. Since then, we couldn’t go as far as saying that the price has recovered, as it’s still hovering at about $8,108, according to CoinMarketCap.