Not long ago, South Korean regulators have widened its investigation on cryptocurrency exchanges. It is aimed especially at the use of corporate accounts which they believe can lead to money laundering. After this was made public, the regulators also started an investigation on South Korea’s largest cryptocurrency exchange called Upbit.
Some of the country’s best financial regulators partnered up with prosecutors to widen their investigation of local cryptocurrency exchange operators. South Korean news outlet called the Korean Times cited an official of the Financial Service Commission (FSC) this past Sunday stating: “Following a request by the Financial Supervisory Service (FSS) and the prosecution to address growing anti-money laundering compliance concerns and possible abuse of cryptocurrencies in money laundering and fraud, the FSC is looking into exchanges’ corporate accounts opened in local banks.”
The creation and use of corporate accounts for cryptocurrency transactions should have ended since the end of January after the government had put a ban on it. So far, however, up to just 30 percent of all crypto accounts have been converted into real name accounts. There are only up to six banks in South Korean have the expertise to issue out real name accounts.
However, those six banks are only converting the accounts of just the largest crypto exchanges in the country, which consists of Upbit, Bithumb, Coinone, and Korbit. They are not yet done converting all accounts into real name accounts. That leads to other small and medium-sized exchanges to continue using corporate accounts for crypto transactions.
The regulators state that the use of corporate accounts could eventually lead fraud. One example of such action is with the CEO of Coinnest, who was charged with embezzlement. Regulators are suspicious with one of the largest cryptocurrency exchange by volume Upbit, therefore leading to an investigation against them. Even after it has been converting into real name accounts.
At the moment, South Korea is negotiating a union with other countries regarding cryptocurrency regulations. At the last International Organization of Securities Commissions (IOSCO) Board of Directors and Annual General Meeting which took place in Hungary, Kim Yong-beom, the vice chairman of the FSC spoke about cryptocurrency problems with major national supervisory bodies.
The Korea Times quoted an official of the FSC stating: “The FSC is collaborating with authorities in other countries. Our latest finding shows that the domestic exchange faked its balance sheets and deceived investors. The FSC is checking Upbit’s computer system with prosecutors and the FSS to audit the exchange’s virtual currency holdings.”