Home / Archive / UPbit Audit Confirms South Korea’s Biggest Cryptocurrency Exchange Not at Fault
3 min read

UPbit Audit Confirms South Korea’s Biggest Cryptocurrency Exchange Not at Fault

Last Updated March 4, 2021 5:07 PM
Joseph Young
Last Updated March 4, 2021 5:07 PM

A major accounting firm in South Korea has revealed results of an audit of UPbit’s cryptocurrency holdings, confirming that the exchange did not inflate its balance sheet and deceive investors.

UPbit Investigation Results to be Released This Week

An official police investigation into UPbit, the country’s largest cryptocurrency exchange, by the Financial Supervisory Service (FSS), Korea Financial Intelligence Unit (KIU) and local police is still ongoing.

Last week, the South Korean police raided the headquarters of UPbit to investigate into the practices of the exchange after receiving tips that the exchange allegedly has been processing cryptocurrency trades without actually holding user funds.

Essentially, the local police accused UPbit of operating its order books without storing cryptocurrencies and pretended that it held large amounts of user funds in bitcoin, Ethereum, and other cryptocurrencies.

At the time, several insider sources have stated that the investigation stemmed from a liquidity issue because UPbit only operated wallets of around 90 cryptocurrencies even though the exchange has 130 cryptocurrencies listed on the platform.

Crypto markets took a tumble last week following news of the raids.

Users of the 30 cryptocurrencies on UPbit that are yet to see independent wallets integrated by the exchange, cannot deposit or withdraw the tokens directly from UPbit and have to exchange the assets to other cryptocurrencies like bitcoin and Ethereum before withdrawing.

The lack of wallet support for dozens of cryptocurrencies led to the investigation and the government accusing UPbit of inflating 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,” reported MoneyToday. 

What Happens to UPbit?

Despite the ongoing investigation, UPbit has been fully operational and continued to process trades for its users. Based on the audit report of Yoojin, it is highly likely that the government investigation into UPbit will end with a simple issue in liquidity and if the report of Yoojin is accurate, UPbit will not suffer from any consequence from the recent case as it stemmed from a simple misunderstanding of UPbit’s wallet structure.

If the UPbit case was one of the major factors that led the cryptocurrency market to fall by large margins over the past week, the cryptocurrency market will likely recover as soon as the official report of the Korea Financial Intelligence Unit is released. Already, the South Korean cryptocurrency community has started to dismiss the UPbit case after the audit report of Yoojin was released and within the next few days, the local financial authorities are expected to reveal the findings of its investigation.

UPbit is a multi-billion dollar company operated by the country’s largest technology conglomerate Kakao. Investors claim that it would not have released the audit report of Yoojin and claimed that the exchange is not at fault if the government investigation will reveal otherwise in the future. As such, investors have started to gain confidence in UPbit and its future.

Images from Shutterstock.