On Friday May 11th, South Korean investigators seized records from UpBit, a South Korean cryptocurrency exchange. According to the Korea Times, the raid was due to suspicion that the exchange is allegedly selling cryptocurrency it doesn’t have on hand to customers.
This latest report should be of no surprise and provides no reason to necessarily think UpBit is guilty of any wrongdoing. South Korea has been very strict in regards to how cryptocurrency exchanges operate for simple fear of money laundering or tax evasion. According to the Korea Times, investigators were looking to see if UpBit might have manipulated its electronic trading system to trick investors into believing it has more cryptocurrencies than what’s listed.
Electronic files and ledgers, and other physical paperwork have purportedly been confiscated for inspection. News of the raid caused cryptocurrencies to take a plunge, however, experts are saying that isn’t any cause for concern and is only temporary.
Bittrex and South Korea’s Kakao teamed up in late September 2017 to create Upbit. UpBit allows for trading in over 100 cryptocurrencies via its Kakao Talk-based mobile stock trading app, Kakao Stock. Just two months previous Kakao Corp launched Kakao Bank, which has become the country’s second Internet-only banking system and is said to have accrued ~800 thousand customers and nearly $500 million (US) worth of loans and deposits within days of its launch.
A May 11th, 2018 posted notice by UpBit to its customers reads that they are working diligently with inspectors and that all UpBit services are operating normally.