articleStartImage

Crypto exchange UPbit sent the space’s markets into a tailspin last week after South Korean officials raided it over fraud suspicions.

However, the exchange’s officials have quickly went to work to try and repair the damage.

UPbit, the largest cryptocurrency exchange in South Korea, conducted an internal audit to prove to its clients and government prosecutors that its top brass was not stealing from clients.

Here, we’ll discuss how the exchange’s officials have been trying to get things back on track.

Deny and prove it false

This week, UPbit officials announced they’d completed an audit, and its results disproved the allegations that they had been untruthful about the company’s finances.

From the moment the allegations hit it, UPbit’s officials have denied they were true. We told you how they leaped into action to calm investors. For example, notices were sent out to clients stressing UPbit was cooperating with the prosecutors.

Officials also stressed that the exchange’s clients’ assets were secure. The allegations include money laundering and insider trading. No official charges have been filed, but prosecutors did seize computers and other records during the raid.

Specifically, company officials said that the exchange had “never bought or sold cryptocurrencies that it did not own since it opened last October”.

Shifting the blame

Instead of owning up to any wrongdoings, UPbit officials seem to be putting the blame on Bittrex, claiming most of its transactions are made through it. That could be what’s led to misunderstandings over its operation, officials claim.

Officials have tried to explain that a separate wallet is used to store cryptos, and that it is separate from so-called deposit and withdrawal wallets. Furthermore, this storage wallet can only be withdrawn together with Bittrex and a third party.

Lee Seok-woo, president of UPbit’s parent company Dunamu, reportedly claimed to a local news outlet that the internal audit dismisses the suspicion of fraud, including “book-trading.”

He’s quoted as saying:

“In early March, when UPbit was suspected of only book transactions without coins…I have been notified that the amount of coins is 100% identical to the number of coins” in the wallets.”

There is also something worth noting about the accountant. Reportedly, the person’s findings were not notarized.

The fall out

Bitcoin’s price had been well on its way to $10,000 before the news of the raid went viral. The raid, however, conducted by the Korean Financial Intelligence Unit (KIU), Financial Services Commission, and Seoul Police, spooked investors and traders. Bitcoin’s price dropped about 9% on the news.

Bitcoin’s price still hasn’t recovered, and was hovering around $8,300 (New York time) at the time of writing Wednesday.