South Korean cryptocurrency experts claim that the government and local financial authorities will find it difficult to file charges against the country’s largest cryptocurrency exchange, UPbit because no investors were affected.
It was reported last week that local police, Korea Financial Intelligence Unit (KIU) and Financial Services Commission (FSU) stormed and investigated the UPbit as a result of suspected fraudulent activities. UPbit was accused by local financial authorities on the basis of inflating its balance sheet and starting to have more money in different cryptocurrencies than what they actually have.
Different sources confirmed on May 15 that an audit carried out by a leading accounting firm in the country called Yoojin discovered that the funds recorded on the balance sheet of UPbit was the same as the actual holdings of the company and confirmed that the company has funds.
“Since early 2018, UPbit created snapshots of its multi-signature wallets and funds stored within them for auditing purposes. Yoojin accounting firm, a major accounting firm based in Seoul, confirmed that all of the funds on the UPbit platform match the cryptocurrency holdings of UPbit stored in its multi-signature wallets,” according to reports.
The lack of wallets for various cryptocurrencies is said to be the root cause of the problem. UPbit has over 130 cryptocurrencies listed on its platform but only 90 cryptocurrencies have local wallets that make it possible for users to withdraw and deposit directly from and to UPbit. For withdrawals to be made by the other 40 cryptocurrencies, users need to change to major cryptocurrencies such as bitcoin and Ethereum.
Sources have stated that the police investigation has discovered nothing unusual and as a result, the official audit report by Yoojin, the South Korean cryptocurrency market has started to gain momentum again.
Given that no investors were affected, sources claimed that in an interview with Korea Herald on May 20, it was stated that the authorities will not be able to make any charges against UPbit.
“As no investors seem to have been affected by Upbit’s alleged business practices, it would not be easy for the authorities to bring any charges to bear,” the source noted.
“But a series of prosecution probes into the exchanges did effectively hurt the overall credibility of the industry,” the insider added.