Upbit almost comes under fire, literally

A man who threatened to set the offices of a cryptocurrency exchange ablaze says he acted out after losing money using the service.

The man was arrested late last week after dousing himself in highly flammable paint thinner and threatening to set himself alight at an Upbit cryptocurrency exchange office in Gangnam, southern Seoul.

The Suseo Police Precinct received a civilian call on Thursday reporting a man was threatening to set Upbit's customer service center on fire.

They arrived on the scene before the man set himself ablaze and arrested him for attempted arson.

During the police investigations, the 40-year-old offender said that he acted out because he was upset about the fact that he lost money while on Upbit.

Public sentiment has been surprisingly sympathetic toward the man, a potential indicator about how the country's dominant virtual asset service provider is operated.

"Of course, the man's actions were over the top and everyone knows that only the investor is responsible for any losses or gains that occurred in an investment," a crypto investor surnamed Park told the JoongAng Ilbo. "However, I know many other investors using Upbit who are also very dissatisfied with their services such as the hasty delisting of coins," he added.

In June, Upbit gave investors just a week's notice of its decision to delist five digital coins that the platform deemed inadequate. The announcement led to a drop in the prices of all five coins by some 70 percent in just one day.

Upbit has delisted 48 percent or 145 tokens from its exchange between October 2017 to June of this year, according to data from Rep. Min Byoung-dug of the Democratic Party.

Upbit has also faced criticism for its struggles with illegal activities such as hacking.

In October, the police said that they were investigating a potential attack on Upbit after receiving a report from an investor who claimed that he had been robbed of 50-million-won ($42,319) worth of digital currency. The investigation is still ongoing.

In 2019, a hacking attack saw Upbit lose 58-billion-won worth of Ether, a digital currency similar to bitcoin.

Experts say that issues with Upbit will continue as digital currency transactions become concentrated on only a handful of crypto exchanges.

Concerns regarding cryptocurrency monopolies like Upbit were exacerbated when dozens of small crypto exchanges shut down after failing to pass the government's toughened regulatory hurdles that came into effect in September.

The new regulations were put in place in a bid to prevent criminal activities like money laundering and improve exchange transparency by taxing profit made from digital currency.

"As Upbit's customers exponentially grew when the small exchanges closed, verification processes such as Know Your Customer (KYC) to check client identities, was rushed and not properly carried out," said Kim Hyeong-jung, a professor of information security at Korea University.

"In the end, the ordinary investors are the ones who suffer the most harm, but these people have no one to blame but themselves, even if it is not directly their fault."

With daily trade volume amounting to $5.81 billion, transaction on Upbit account for about 80 percent of all cryptocurrency transactions in Korea.

Korea has one of the world's largest markets for cryptocurrency, with the Korean won ranked as the third most-used currency for trading Bitcoin worldwide after the U.S. dollar and the euro, according to industry tracker Coinhills data.

BY PARK KUN, LEE JIAN [lee.jian@joongang.co.kr]