The regulatory entities of South Korea suspect that executives of the famous cryptocurrency exchange Upbit could have been diverting funds to their personal accounts. The investigation of the authorities started when the suspicion arose that the executives could have been operating without having the direct custody of the funds of the cryptocurrency exchange’s clients.
The prosecutors from the South District Court in Seoul are following the leads regarding the possible forgery and fraud. The team of financial investigators is comprised of 10 specialists and it went to the central headquarters of Upbit located in Seoul on May 10th and 11th. The investigation team took into custody electronic devices and transaction registers in order to verify the irregularities. The prosecutor’s office said: “We have confiscated hard drives and accounting books. The analysis will take some time.”
The prosecutor suspects that the executives from Upbit are diverting funds and the investigation is focused on the CEO of Upbit, Lee Seok-woo. He is the main suspect in this case of diverting funds of the clients of the cryptocurrency exchange to an alternative account, other than the ones managed by the exchange platform.
The CEO of Upbit said: “I decided to assume the role of the CEO after seeing the potential for global growth of Dunamu and the vision of the cryptocurrency market and the blockchain industry.”
According to local media, the authorities believe the company is realizing operations in the system without having funds in cryptocurrencies, since the platform is functioning with less wallets than the quantity of exchangeable cryptocurrencies in its own offer. This is why the clients are not able to verify the management of their resources. TRON, Bitcoin, EOS, ADA and Bitcoin Cash are the main exchangeable cryptocurrencies on the platform that has a daily trading volume of 237 bitcoins, which is equal to more than two million dollars at the current price of the world’s main and most popular cryptocurrency.
After the investigation launched by the authorities was announced in the media, a wave of withdrawals started by part of the traders from the Upbit platform. Even though the suspicions about the alleged diversion of funds and fraud have not been confirmed, the clients in South Korea withdrew considerable amounts of cryptocurrencies from the Upbit platform.
Upbit confirmed the investigation and published a statement in which it assured the clients that the withdrawals and deposits were functioning normally.
This news could be linked to the correction of the cryptocurrency market these days. The prices of the top 10 cryptocurrencies according to market capitalization are going down. It is worth mentioning the significant drop of the price of Cardano. The value of this cryptocurrency dropped by 18.18% to 0.26 dollars and its total market capitalization is around 6.8 billion dollars. Cardano is one of the most exchanged cryptocurrencies on Upbit.
On the other hand, Bitcoin has a market capitalization of almost 150 billion dollars and its price is 8.590 dollars. The correction of Bitcoin was 8.21%, while Ethereum is valued at 680 dollars and had a correction of 10.25%. The market capitalization of Ethereum is around 67.6 billion dollars. Ethereum is followed by Ripple (dropped 15.22%), Bitcoin Cash (dropped 16.37%) and EOS (dropped 18.19%).