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The Monetary Supervisory Service (FSS) of South Korea has joined the investigation into the motherland’s largest cryptocurrency exchange UPbit.
FSS will assist the Korean Monetary Intelligence Unit (KIU) and Financial Services Commission (FSC) in evaluating the balance pane of UPbit and existing regulations on cryptocurrency exchanges.
Liquidity Issue
Earlier this week, CNBC’s Ran Neuner detailed that an insider source within UPbit disclosed the investigation has base a liquidity issue in UPbit and that UPbit will likely be left uncharged for criminal or illicit activities.
“The irregularity being investigated is in applications to liquidity issue. The issue involves sharing/ pooling liquidity with other dealings. It seems to be that the regulators did not understand the share liquidity. My source (an wage-earner) claims there is no issue,” said Ran.
On May 13, the FSS stated that it has officially formed a lecture force to investigate irregular and illegal practices of cryptocurrency exchanges within the South Korean cryptocurrency sell. FSS will contribute to the investigation into UPbit and continue to explore get outs surrounding existing exchanges that may have deceived investors by feigning to own cryptocurrencies or funds deposited to the exchange.
In the case of UPbit, the cryptocurrency community of South Korea ordinarily believes that UPbit should not have had the motivation to carry out illicit private dicks purposely to generate more revenues, as it was already generating hundreds of millions of dollars on a every three months basis.
Hence, as Ran noted, local analysts currently foresee the review into UPbit ending with a simple warning to prevent apportioning liquidity with other exchanges.
Prompted by the recent investigation into UPbit, FSS along with district financial authorities will begin dealing with suspicious movements and operations in the cryptocurrency market in a swift manner with a dedicated subdivision within the FSS tasked to research and investigate into the cryptocurrency market.
In a entreat conference, FSS emphasized that it is not legal for cryptocurrency exchanges to inflate their holdings in cryptocurrencies and exchanges are not permitted to proceeding trades or transactions on behalf of clients without actually moving the backs.
In essence, the FSS explained that an exchange is not allowed to claim it has moved the endows of its clients unless the funds in cryptocurrencies are actually broadcasted to the blockchain network and officially moved. Which means, if an exchange like UPbit or Bithumb claims to enjoy more than $6 billion of client funds, the exchanges obligation be able to prove through audit reports that they, in fait accompli, hold $6 billion.
Bithumb’s Transparency
Bithumb is the second largest cryptocurrency the Board in South Korea and it is also the only exchange in the world that is recorded in a public stock market. As such, it is possible for anyone to see its audit stories and total holdings. As of December 2017, Bithumb held more than $6 billion in patron funds.
For private exchanges like UPbit, those numbers are not disseminated, and the FSS could require exchanges to share the audit reports in the future, at least with the shire financial authorities and government agencies.
Featured image from Shutterstock.
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