For the past six months, top South Korean crypto exchanges
For the past six months, top South Korean crypto exchanges have been marred in several controversies and scandals attracting police investigations and retreat from the community.
These six months have seen the controversial acquisition of Bithumb, an investigation into Upbit, an airdrop mishap by Coin Zest, and the arrest of two executives from the Komid. Due to these mishaps, the crypto community has been critical and investors are losing confidence in the local crypto exchange market.
Let us try to analyze each of these mishaps and the reasons behind it.
The Controversy Over Bithumb Acquisition
Bithumb, the number one South Korean exchange by volume of trade, was marred in yet another controversy because of the new owners. It is being alleged that the new token offering of BXA by the new owners has been timed with the acquisition of the exchange. The community is critical over the timing of the acquisition and the pre-sale of BXA tokens.
The new owners of the exchange, BK consortium and its chairman Kim Byung Geon have denied any such allegations, claiming that they have already secured the $354 million fund required for the takeover. The transfer of ownership took place in October 2018, which was viewed as a positive move, since the Exchange in question was in the news throughout 2018 and not for good reasons.
As the controversy intensified, Kim addressed a Press conference on December 27, 2018, and said,
We will create a cryptocurrency exchange alliance based on Bithumb, which has the highest level of liquidity in the global market and create an ecosystem that shares order books and liquidity with other leading exchanges. We also acquired a company based in Shanghai to focus on compliance and to deal with regulatory frameworks.”
However, the press conference did not help the controversy to die down any sooner and people were still critical over the presale timing of the new token. The exchange which became number one in terms of daily trading volume was breached twice in 2018.
UPBit Under Investigation
Before the Bithumb controversy, the second largest crypto exchange UPBit publicly announced that police are investigating into its operations in early 2017.
Police allege that the exchange showed fake volumes to attract users and also created fake wallets to alter the balance sheet of the company in its first few months of operations. The prosecutors claim that UPBit faked $200 Billion worth of trade, selling $130 Million worth of Bitcoin.
The UPBit team in response to the investigation said,
“Upbit did not commit wash trading (cross trading), imaginary orders (provision of liquidity), or fraudulent trading. The company did not trade cryptocurrencies which it didn’t own, or have its staff and employees benefit from such trading. Upbit will fully cooperate with the authorities during its trial where the difference of viewpoints between the Prosecutors’ Office and Upbit regarding the methods of the transaction will be explained,”
Coin Zest and Komid Face Community Heat
Apart from the top 2 exchanges, Coin Zest faced the community heat over its airdrop mishap, where it airdropped Bitcoin, Ethereum, and another top cryptocurrency instead of the newly formed altcoin for promotion. The company did roll back and requested the receivers to return the top coins.
Another small exchange which goes by the name Komid faced the ire when two of its executives were jailed for two years for faking trade volume while the CEO of the Exchange got a 3-year sentence.