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Korea’s Biggest Crypto Exchange UPbit Comes Out Clean in Audit after Raid

Last Updated March 4, 2021 4:06 PM
Joseph Young
Last Updated March 4, 2021 4:06 PM

UPbit, currently the biggest crypto exchange in South Korea, came out clean in an audit report which proved the exchange had 100 percent of the amount its balance sheet demonstrated.

Police Raid in May

On May 11, as CCN.com reported, UPbit was raided by local authorities under the suspicion of balance sheet manipulation and inflated volumes. At the time, the Financial Services Commission (FSC), the main financial watchdog of South Korea, and the Korea Financial Intelligence Unit (KFIU) secured the hard disks and accounting book os UPbit to evaluate claims from unknown sources that the exchange is insolvent.

Four days subsequent to the raid, the UPbit team hired Yoojin, one of the largest accounting firms in South korea, to validate the holdings of the exchange and the company’s balance sheet. On May 15, Yoojin officially cleared UPbit, concluding that the holdings of UPbit exactly matched the amount of user funds listed on its balance sheet.

“Since early 2018, UPbit created snapshots of its multi-signature wallets and funds stored within them for auditing purposes. Yoojin accounting firm, a major accounting firm based in Seoul, confirmed that all of the funds on the UPbit platform match the cryptocurrency holdings of UPbit stored in its multi-signature wallets,” local reporters said at the time.

Still, despite the audit report of Yoojin, the government did not release any additional information on the case, leading investors to speculate on the state of UPbit, the country’s biggest crypto exchange, and whether the exchange is safe to utilize.

Today, on August 4, Dunamoo, a subsidiary company of Kakao, South Korea’s main internet conglomerate that operates KakaoPay, KakaoStock, KakaoTaxi, KakaoTalk, and KakaoStory, has released a report citing the official audit results released by Yoojin.

The report of Dunamoo emphasized that UPbit holds 100 percent of user funds and 27 percent more than the cryptocurrency holdings of its investor, more than enough to reimburse every user on the platform.

Lee Seok-woo, the president of Dunamoo, said :

“UPbit currently has the exact amount of money held by the platform’s investors along with additional funds, more than enough to compensate every investor. Hence, UPbit is able to process withdrawals for customers upon the request of its customers and the exchange will continue to release audit reports on a regular basis to prove its solvency.”

Controversy Around UPbit Cleared

While UPbit did release the audit report of Yoojin three months ago, due the lack of an official statement from Dunamoo and the KFIU, investors were uncertain about the legitimacy of the balance sheet and operations of UPbit.

The official statement of Dunamoo released on August 4 has conclusively proven the solvency of the company, debunking all of the false accusations and reports around UPbit.

Due to the inability of Bithumb to process deposits and withdrawals for over a month, UPbit has overtaken Bithumb to become the largest crypto exchange in South Korea. Investors expect Gopax, a cryptocurrency exchange backed and invested by the country’s second most valuable commercial bank Shinhan Bank, to lead the cryptocurrency exchange market of South Korea in the upcoming months.

Featured image from Shutterstock.