Upbit update: Korean authorities continue investigating nation's largest exchange

17 May, 2018
by Conor Maloney
News
Upbit update: Korean authorities continue investigating nation's largest exchange

South Korea's largest cryptocurrency exchange was shut down during a police raid amid allegations of book trading. 

Book trading is a practice wherein the exchange sells coins that are not actually in its possession, and Korean prosectors and investigators point out that 40 of the 130 coins listed on Upbit do not support e-wallets, leading to questions of how the trades are being made.

The issue here is liquidity - if all investors were to withdraw at once under this method, the exchange would not have the liquidity to return all the funds, rendering the initial trades legally fraudulent. News1 Korea reports that most exchanges handling large amounts of coins operate in this way, pointing out that to class this activity as fraud would affect the whole industry.

Upbit has called the investigation a "misunderstanding" and are cooperating with police. The exchange team stated that they procure the requried cryptocurrencies directly after transactions are made in cases where the currency is not supported by an e-wallet, with no risk of fraud of lack of liquidity. Upbit claims that it "never bought or sold cryptocurrencies that it did not own since it opened last October.”

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