Upbit cryptoexchange may have faked trades

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Upbit cryptoexchange may have faked trades

Upbit, Korea’s second-largest cryptocurrency exchange, is being accused of fabricating 254.5 trillion won ($226.8 billion) worth of orders to inflate volume and attract users.

The Seoul Southern District Prosecutors’ Office announced Friday that it indicted three executives and senior managers of Dunamu, the Upbit operator, on fraud charges. Among those indicted is the company’s majority shareholder and former CEO.

Prosecutors are accusing them of creating a fake user account between last September and November and using it to inflate the company’s capital by 122.1 billion won and sell 11,550 coins to around 26,000 real users. They also suspect that the company used a bot to create automatic orders whenever cryptocurrency prices at Upbit dropped too low.

“We suspect that the company’s goal was to make it appear that the exchange had a high transaction volume,” said a prosecutor involved in the case.

Dunamu denies all charges.

“We have never conducted any fraudulent transactions,” the company said in a statement.

While the company did acknowledge that it used a company-run account to conduct transactions, it explained that the purpose was to improve liquidity and stabilize trade when the exchange first opened.

Upbit experienced explosive growth when it first opened last October despite being a latecomer compared to other industry players, such as Bithumb, Coinone and Korbit.

At the height of its popularity, the exchange processed between 4 trillion won and 6 trillion won in daily transactions. Currently, it is estimated to be second to industry leader Bithumb in terms of transaction volume.

The accusations are expected to have considerable impact on the credibility of cryptocurrency in Korea.

BY PARK HAE-LEE AND KIM EUN-JIN [kim.eunjin1@joongang.co.kr]
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