Audit and investigation gives UpBit exchange a clean bill of health
After going through the wringer, UpBit has come out squeaky clean.
UpBit has recently undergone an investigation by Korea's Financial Services Commission (FSC) and the Korean Financial Intelligence Unit, Forbes reports, along with other Korean exchanges. Early suggestions were that UpBit and Bithumb, Korea's most prominent competing exchanges, had been reporting each other with the hopes of getting the other shut down.
The investigations turned out to be prescient as Bithumb was hit by a hack attack a few weeks later, losing $30 million of customer cryptocurrency in the process and likely causing a market slump, even as it promised to refund affected customers. That no issues were found at Bithumb during the prior investigation might be a testament to the sheer difficulty of crypto cybersecurity and the need for formal standards rather than just guidelines.
UpBit also got a clean bill of health though, local news reports, despite anonymous tip-offs saying it was insolvent.
At the same time, authorities didn't release an official statement on what exactly they found. Between this lack of communication and the Bithumb hack, people may have been hesitant to implicitly trust the results of the formal investigation.
UpBit also completed an independent audit carried out by Yoojin, one of South Korea's largest accounting firms. Then Dunamoo, a subsidiary company of Korean Internet giant Kakao, released a report citing the official audit results which further verified Yoojin's findings.
Both of these together might go a long way towards easing concerns about UpBit's solvency and security as well as putting the anonymous reports to rest. The reports found that UpBit possesses 103% of customer cryptocurrency amounts, and 127% of fiat value, making it able to fully compensate customers in the event of a total loss.
Korea's exchanges are under a lot of scrutiny right now. In addition to the FSC raids and the audits, exchanges have also started a voluntary self-regulation scheme under the industry association, the Korean Blockchain Association.
However, many have also been sceptical of the reliability of this self-regulation. That at least one exchange has been subject to a battery of investigations and audits and come through with a clean bill of health might be reassuring for many.
Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VET, XLM, BTC and ADA.