Business

Erik Gibbs

Upbit audit confirms South Korean exchange did nothing wrong

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.

The raid was led by the country’s Financial Supervisory Service, local police and the Korea Financial Intelligence Unit (KIU). The police investigation is still ongoing; however, the results of the audit should provide a level of comfort to the community. Upbit has been accused of processing cryptocurrency trades although it wasn’t actually holding users’ funds. Police have claimed that the exchange wasn’t storing cryptocurrency and only “pretended” to maintain the funds.

According to MoneyToday report, Seoul-based Yoojin accounting firm “confirmed that all of the funds on the Upbit platform match the cryptocurrency holdings of Upbit stored in its multi-signature wallets.” The report noted that the cryptocurrency exchange had been creating snapshots of its multi-sig wallets as well as the funds stored in them for auditing purposes since early 2018.

Meanwhile, sources familiar with the investigation have pointed out that it most likely sprung from the fact that Upbit only maintains wallets of about 90 cryptocurrencies despite having 130 cryptocurrencies listed on the exchange. Holders of these other 30 digital coins that want to deposit or withdraw directly through Upbit must first exchange them into other crypto, such as BTC or Ethereum. The source of the tips that began the ordeal has not been revealed. One has to wonder if a rival exchange was behind the actions.

Upbit has continued to operate normally throughout the ongoing investigation. Because of the results of the audit, it is possible that the investigation will be closed and Upbit will more than likely not suffer any long-term ramifications.

The raid was a factor in the markets taking a dip last week. Now, as of the result of the audit, investors are regaining confidence and the markets have been stabilizing. The official report from the KIU is expected to be released at any time, which should help the markets see additional gains. South Korean cryptocurrency enthusiasts and investors have already started to forget about the non-incident, leading to localized market recoveries.

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