Asia Business Channel

Executives at South Korean crypto exchange UPbit indicted for fraud

The country’s prosecutors have formally charged the executives of UPbit, one of South Korea’s largest cryptocurrency exchanges. The Prosecutors’ Office of the southern district of Seoul has indicted three senior staff members, including founder Song Chi-Hyung, on charges of fraud.

The executives are alleged to have made fraudulent transactions from September to December 2017, using a fake corporate account to make bogus orders worth or $226.2 billion USD (254 trillion won) to inflate trading volume figures and attract more customers to the exchange. They are also accused of selling 11,550 bitcoins to customers to reap $133.8 million USD (150 billion won) through rigged transactions.

UPbit, however, denied the allegations in a notice stating that, “The Company provided liquidity to the Company’s corporate account in order to stabilize the trading market at the beginning of the service opening. This period is from September 24, 2017 to December 11, 2017.” It added that the corporate account does not have a withdrawal function.

The exchange went on to say that has “not benefited or traded” in this process, though it conceded it had made some transactions early for marketing purposes over about two months. They did not affect the market, UPbit claimed, and comprised about 3% of the total volume at the time.

In March of this year, the prosecutors raided the UPbit’s head office in the Gangnam-gu district, and seized various accounting books and computer hard disks. At the time, the exchange was suspected of fraud for allegedly selling cryptocurrency to customers that it does not actually hold.

The South Korean government has been increasingly taking action against crypto exchanges since the start of the year. In January, the country’s police and tax office officials raided Bithumb and Coinone exchanges amid an investigation into alleged tax evasion. In March, prosecutors raided three unnamed cryptocurrency exchanges over suspicions that staff embezzled funds from customers’ accounts.

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