The largest cryptocurrency exchange in South Korea, Upbit, is suspected of fraud and is currently under investigation. The prosecutors have conducted searches at the exchange and confiscated computers and accounting records.
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Upbit Under Investigation
South Korea’s largest cryptocurrency exchange, the Kakao-backed Upbit is suspected of fraud, according to local media. While maintaining that customers’ assets are still kept securely, the exchange posted the following statement on its website:
Upbit is currently under investigation by the prosecution, and we are working diligently. Upbit services such as all transactions and withdrawals are operating normally.
Upbit is currently the world’s fourth-largest cryptocurrency exchange and the largest in South Korea with a 24-hour trading volume of $1.812 billion at the time of this writing, according to Coinmarketcap. The exchange is affiliated with Kakao Corp which operates the country’s most popular chat app, Kakao Talk.
Suspected of Fraud
Crypto of Korea explained:
The company [Upbit] is suspected of transferring customer funds from their cryptocurrency exchange account to a representative or executive account…Korean prosecutors have conducted search and seizure against the nation’s largest cryptocurrency exchange, Upbit, on charges of fraud.
According to the publication, the financial investigation team of the Seoul Southern District public prosecutors’ office sent prosecutors and investigators to Upbit headquarters on May 10 and May 11 “to secure computer hard disks and accounting records.” More than 10 investigators were sent to Upbit, Money Today added.
“After the digital forensics investigation on the seizures [seized items] and confirming the illegal charges, we will decide whether and in what direction we will investigate further,” the prosecutors were quoted saying.
Accused of Deceiving Customers
Upbit allegedly “pretends to hold [virtual currencies] without holding virtual currencies,” the news outlet noted.
“The prosecution believes that Upbit has entered [into] the computer system as if it had virtual currencies that it does not actually own, and deceived customers,” KBS elaborated. According to the prosecution, the Hankyoreh described, “Upbit has been suspected of carrying out ‘book-trading’ without holding virtual currencies in a wallet.”
The Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) have been investigating domestic crypto exchanges since March, according to Yonhap News. Their first target was Coinnest where the chairman, Kim Ik-hwan, was over embezzlement and fraud charges. According to Money Today, unlike Coinnest, there is no suspicion of embezzlement with Upbit.
Do you think Upbit is guilty? Let us know in the comments section below.
Images courtesy of Shutterstock and Upbit.
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In today’s bitcoin in Brief we are covering a number of stories related to China. According to statements by Chinese officials, the People’s Republic is developing a national standard for blockchain technologies, which should be introduced next year. Also, the Zcash Foundation is taking steps to protect the network of the privacy coin from ASIC-based mining. Chinese giant Bitmain has recently launched its Antminer Z9 Mini designed to process transactions for cryptos like Zcash, which use the Equihash algorithm.
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China Preparing National Blockchain Standard
Chinese authorities are working to develop a national standard for and applications. The new system should be completed and introduced by the end of 2019, according to reports by state-controlled media in the People’s Republic.
A national standard plan for blockchain is under preparation and respective departments will set up a national blockchain and distributed Accounting Technology Standardization Committee said Li Ming, director of the Blockchain Research Office at the Electronic Industry Standards Research Institute of the Ministry of Industry and Information Technology. Li Ming told the Economic Information Daily that the national blockchain standard will include basic standards, business and application standards, process and method standards, credible and interoperable standards, and information security standards. He also added that the scope of its applicability will be expanded in the future.
According to a recent statement by Yu Kequn, director of the National Center for Information Technology Security Research, “The development of blockchain technology may become an important step for to grasp the global technological competition.” Yu Kequn also noted that blockchain technology is a new integrated application of distributed data storage, peer-to-peer transmission, consensus mechanisms, and encryption algorithms. “It has the characteristics of decentralization, openness, tamper resistance, and anonymity,” the official pointed out and added: “It can be applied in the production, management, and transaction chains, and it will bring the entire life cycle of restructuring to different areas, so that it can be managed and traceable.”
Iceland’s Missing Mining Rigs May Have Been Found in China
The mining equipment which was stolen from data centers in Iceland several months ago might have reached China, according to media reports from the Nordic nation, which has crypto miners with cheap energy and favorable conditions. At least 600 computers, graphics cards, motherboards, processors, and other hardware, worth an estimated $2 million, disappeared in a series of burglaries in December and January. Last month, Chinese authorities conducted a raid on a crypto mining farm in the city of Tianjin. According to local media, police have confiscated 600 computers used to mine cryptocurrency in the illegal facility.
The suspected organizer of the heist in Iceland, Sindri Thor Stefansson, fled to Sweden after escaping from a low security prison in his country. He was recently and is now awaiting extradition to Iceland, where he is going to face trial. The ongoing investigation and the court proceedings are expected to establish the facts and circumstances surrounding one of the biggest burglaries in Iceland’s history. Tracing the stolen mining equipment is a priority for authorities trying to get to the bottom of this case. Their findings should prove or dismiss the media speculation around the possible connection between the two incidents.
Zcash Opposes ASIC-Based Mining after Chinese Giant Launches Equihash Miner
Developers of Zcash have stated that the struggle against ASIC-supported mining is a priority. They have indicated their opposition after the launch of a new application specific circuit designed to process transactions for the privacy coin. Zencash, a Zcash fork, has also to potentially change its algorithm for the same reason. Earlier in May, the Chinese mining giant Bitmain revealed the upcoming release of a new device that will be capable of working with the Equihash algorithm, which was itself introduced to prevent ASIC mining and is used by Zcash and other cryptos. ASICs were initially developed to mine mainly bitcoin. The highly specialized hardware is capable of handling the enormous number of calculations involved in the processing of its transactions.
Bitmain has a track record of successfully overcoming ASIC-resistant algorithms. The mining equipment producer has already developed powerful miners for many cryptocurrencies whose developers have tried to stop the centralization of hashing power. These include miners for the algorithms Ethash, used by the Ethereum network, and Cryptonight, used by Monero. The new Antminer Z9 Mini, developed to mine Zcash, Zencash, and others, offers a hashrate of 10k Sol/s. It was expected to hit the market in June, but according to the manufacturer, it can be ordered now. “To prevent hoarding and to let more individuals worldwide get one, we’ve set a limit of one miner per user,” Bitmain said in a .
The management of the Zcash Foundation has decided to allocate resources to study the influence of ASIC mining on the network. An advisory council will be convened to provide a “scientifically grounded answer” to the problem. The team behind Zcash, however, may be forced to fight a war on two fronts, after researchers from the University College London recently found a vulnerability in the crypto’s algorithms. They believe that certain patterns in Zcash transactions significantly weaken its anonymity. The claim is that when the cryptocurrency is transferred from unprotected to protected addresses and then back again, the overall level of anonymity decreases significantly.
Student Leaves China after Losing on Crypto Investments
A Chinese college student has reportedly lost a small fortune by local standards due to unwise crypto investments and has already left the country in search of better opportunities to compensate the losses. Liu Ke, a sophomore in his twenties, used all his money to buy cryptocurrency, mostly aircoins, when markets were going up towards the end of last year. When cryptos were hitting their all-time highs, he spent a total of 140,000 yuan (~$23,000), including amounts he borrowed from online micro loan platforms like Alipay and Baidu. He even “invested” the money for his tuition fees. Liu Ke told the local outlet 8btc that he now lives and works in the Cambodian coastal resort Sihanoukville, where he hopes to earn more money to cover his debts.
What are your thoughts on today’s stories in bitcoin in Brief? Let us know in the comments section below.
Images courtesy of Shutterstock, Yarcube, Wikipedia.
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