South Korea's Financial Supervisory Service (FSS) has joined an investigation by the Financial Intelligence Unit (KIU) and the Financial Services Commission (FSC) into alleged irregularities at the country's largest cryptocurrency exchange, UPbit.
Earlier this week, CNBC's Ran Neuner reported that according to one of the exchange's employees, the regulator's concerns are related to liquidity and most likely UPbit will be cleared of charges of criminal or illegal activity. “The issue relates to liquidity sharing/pooling with other exchanges,” the statement said.
On May 13, FSS announced the formation of a task force to investigate illegal activities of cryptocurrency exchanges in the South Korean cryptocurrency market. The FSS will take part in the investigation into UPbit and will monitor whether other exchanges are deceiving their investors by claiming to own funds that they actually do not.
The South Korean cryptocurrency community believes that UPbit had no motivation to carry out illegal transactions to increase income, since its quarterly revenue is already hundreds of millions of dollars. Local analysts believe that the investigation into the UPbit exchange will end with a simple warning to prevent other exchanges from sharing liquidity.
FSS will now work with local financial authorities to deal with suspicious activities and transactions in the cryptocurrency market through a special department.
At the press conference, representatives of the Financial Supervision Service emphasized that it is illegal to provide false balance information and cryptocurrency exchanges are not allowed to process trades or transactions on behalf of clients without actual movement of funds. This means that if the UPbit or Bithumb exchanges claim to have $6 billion in client funds, then such exchanges must be able to prove through audit reports the presence of such $6 billion.
Bithumb is the second largest cryptocurrency exchange in South Korea and the only exchange in the world that which is listed on the stock market. In fact, anyone can look at the audit reports and total holdings of this exchange. As of December 2017, Bithumb held over $6 billion in customer funds. Private exchanges such as UPbit do not publish such information, but FSS may require it.
According to https://www.ccn.com
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