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Blockchain & Crypto Analysis

UPbit – Raided. Audited. Cleared.

Wednesday, May 16, 2018

Coingeek:

Rumors that South Korean cryptocurrency exchange UPbit came under fire last week, as the exchange’s headquarters were raided over claims that the company was involved in fraud by inflating its balance sheet. Now, following an audit performed by an outside accounting firm, investors can breathe a sigh of relief, as the audit revealed that the company has done nothing wrong.

A few days ago, I said this whole UPbit situation made no sense.

After an internal audit, it turns out UPbit was not at fault and all customer funds are accounted for. What I really want to know is who caused this FUD in the first place, and how much profit he or she made shorting the market and buying back at the bottom.

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UPbit Cryptocurrency Exchange Allegedly Raided by South Korean Authorities

Friday, May 11, 2018

Chosun:

South Korea’s Financial Supervisory Service sent 10 investigators to the head office of UPbit, located in Gangnam-gu, Seoul, at 10 am on the 11th. UPbit is under investigation for transferring customer funds from their accounts to an executive’s account.

The story here is that an executive at UPbit transferred customers’ coins into his or her own personal account. Like any other centralized exchange platform, trading on UPbit isn’t a transparent process. A similar event happened over at BitGrail a few months ago, where over $150 million worth of XRB was “stolen” over a period of a few months without customers’ knowledge. Always remember the exchange controls the balance you see on the computer screen. It doesn’t matter if those coins actually exist or not.

Regarding this event, it would be truly stupid for an executive to siphon customer funds like this. Obviously greed is the motivating factor, but why is it necessary to be greedy when you’re an executive at one of the biggest exchanges in a country that holds a very supportive stance on cryptocurrencies and blockchain projects. Cryptocurrency is an emerging asset class in its infancy. Now is the wrong time to be greedy when there’s still so much easy money to be made in the future. This makes no sense unless the executive happened to be on his or her way out.

It’s unclear if this news was the cause of BTC’s ~7% drop today. If so, remember what happened after Bithumb’s “raid” a few months ago?

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