South Korea’s top financial regulator is widening its probe on accounting practices at big companies, which may include the nation’s big cryptocurrency exchanges. This announcement follows the prosecutors launching an investigation about the use of corporate accounts by crypto venues which the regulators say can lead to money laundering.
The exact details of the latest investigation or the degree to which cryptocurrency operators engaged are not available. But the chief of the Financial Supervisory Service (FSS) was quoted by Yonhap News as saying he “personally feels a need to promptly push to regulate cryptocurrency tradings.”
South Korea’s exchanges hold about $1.9 billion worth of cryptocurrencies in their accounts as per the latest report by the central bank of the country, which easily lists some of them among the big firms targeted by the latest FSS probe.
How to Prepare for CySEC’s New Tiered LeverageGo to article >>
Huge Amounts of Crypto Assets
Bithumb, South Korea’s second-largest cryptocurrency exchange, posted an extraordinary annual gain of nearly $400 million in 2017 on the back of the national frenzy over digital money. At the time, global trading volumes held steady above $40 billion when the virtual asset class gripped the attention in Korea and worldwide alike.
Earlier in May, Upbit was raided by government’s investigators and local police for alleged fraud. However, the exchange managed to pass independent audits, showing full solvency as Upbit’s reserves ratio stands at 103 percent and cash ratio stands at 127 percent.
The solid earnings are definitely good news for the industry in South Korea, which has been cracking down on cryptocurrencies to combat excessive speculation and illegal activities, part of a push by governments around the world to rein the nascent sector in. Over the past few months, Korean authorities have raided several crypto venues, banned ICOs, blocked foreigners and financial institutions from domestic exchanges.
The use of corporate accounts for crypto transactions has been a major concern as the regulators say it can lead to fraud such as recently seen with Coinnest whose CEO was charged with embezzlement. The largest Korean crypto exchange by volume, Upbit, is also currently under investigation even though banks have been converting its accounts to real-name ones.