On August 2, 2021, South Korean cryptocurrency exchanges Upbit and Bithumb were raided by the Seoul Metropolitan Police Agency’s Special Investigation Department. The raids were conducted as part of an ongoing investigation into an alleged fraudulent cryptocurrency investment scheme involving a local lawmaker.
According to reports, the lawmaker, who has not been named, used his political influence to convince investors to purchase his company’s tokens with the promise of high returns. It is alleged that the tokens were sold at inflated prices and eventually became worthless, leaving investors with significant financial losses.
The investigation into the alleged scheme began earlier this year, with the lawmaker being questioned by police in July. The raids on Upbit and Bithumb were conducted in an effort to gather evidence related to the case, including transaction records and communication between the exchanges and the lawmaker’s company.
Both Upbit and Bithumb are among the largest cryptocurrency exchanges in South Korea, with a combined daily trading volume of over $2 billion. The raids caused significant disruptions to their operations, with users reporting difficulties accessing their accounts and executing trades.
In response, both exchanges released statements expressing their cooperation with authorities and commitment to ensuring the security and legitimacy of their operations. Upbit stated that it was working closely with law enforcement to aid the investigation, while Bithumb emphasized its compliance with regulations and commitment to protecting users’ assets.
The raids on Upbit and Bithumb are the latest in a series of actions taken by South Korean authorities to regulate the country’s cryptocurrency industry. In 2018, the government implemented a ban on initial coin offerings (ICOs) and tightened regulations on cryptocurrency exchanges in response to concerns over fraud and money laundering.
Despite these measures, South Korea remains a major player in the global cryptocurrency market. The country’s tech-savvy population and relatively high adoption rates of digital assets have led to a thriving ecosystem of exchanges, trading platforms, and blockchain startups.
However, the industry has also faced challenges, including high-profile hacks and regulatory scrutiny. In 2019, Bithumb was hacked for the third time, resulting in the loss of $13 million worth of cryptocurrency. The incident prompted the company to implement stricter security measures and introduced a compensation scheme for affected users.
The regulatory landscape for cryptocurrency in South Korea continues to evolve. In March of this year, the government announced plans to introduce a new tax regime for cryptocurrency, requiring individuals and companies to pay taxes on profits from trading and mining. The move aims to increase transparency and reduce the potential for money laundering and other illicit activities.
The raids on Upbit and Bithumb may be a sign that the government is stepping up its efforts to combat fraud and illegal activities in the cryptocurrency industry. However, some have criticized the raids as an overreach, arguing that they may harm the legitimate businesses that operate within the sector.
Despite the challenges facing the industry, many remain bullish on the future of cryptocurrency in South Korea. Blockchain technology is seen as having significant potential for transforming a range of industries, from finance to healthcare to logistics. As such, investments in blockchain startups and projects continue to flow into the country, signaling a strong appetite for innovation and disruption.
In conclusion, the recent raids on Upbit and Bithumb highlight the ongoing challenges facing the cryptocurrency industry in South Korea. While the country remains a major player in the global market, regulatory scrutiny and the risk of fraudulent activities continue to threaten its growth. Nevertheless, the potential for blockchain technology to transform various sectors and drive innovation means that the future of cryptocurrency in South Korea remains promising.
South Korean prosecutors have raided two of the country’s largest coin trading platforms, Upbit and Bithumb, amid suspicions of wrongdoing related to the cryptocurrency holdings of a politician. The investigation centers around Kim Nam-kuk, a first-term member of South Korea’s National Assembly, who owned around 800,000 Wemix coins worth around $4.5m at the time. Transaction records and materials have been seized from the exchanges as well as Kakao Klip, a blockchain platform run by Korean tech giant Kakao Corp. Kim allegedly transferred coins from Bithumb to Upbit early last year. He has faced allegations of conflict of interest and using insider information. Kim has denied any wrongdoing.
