The South Korean Financial Service Commission (FSC) has opened an investigation into Upbit, the country’s largest crypto exchange.
The financial regulator aims to uncover the exchange’s operational structure and monopoly of South Korea’s crypto asset market.
This sudden move on Upbit comes amid a broader crypto market struggle, with Bitcoin and Ethereum facing significant price declines. The recent development raises concerns about further pressure on market prices.
South Korean Financial Regulator Probes Upbit Crypto Exchange Over Market Monopoly
South Korean financial regulator, the Financial Service Commission, has opened an investigation into the country’s largest crypto exchange, Upbit.
This move came following the National Assembly State audit. During the session, Lee Kang-il, a Democratic Party lawmaker, highlighted the increasing monopoly in the South Korean crypto landscape.
The lawmaker raised concerns regarding Upbit’s dominance of the country’s crypto space. Lee Kang-il mentioned that Upbit leveraged its collaboration with K-Bank to boost its market dominance. He noted that the relationship between the two entities violates the principle of differentiating finance from industry.
Again, the lawmaker pointed out that Upbit holds a substantial percentage of K-Bank’s deposits as the bank prepares for its upcoming IPO (initial public offering).
Representative Lee stated: “Out of K Bank’s 22 trillion won in deposits, Upbit deposits account for 4 trillion won or 20%. If Upbit transactions are cut off, a bank run on K bank will occur.”
Moreover, the lawmaker slammed some of K-Bank’s operations and special incentives to Upbit clients. He explained that though the bank’s operating profit margin is less than 1%, it still offers Upbit customers a 2% interest rate on deposits.
The FSC’s Chairman, Kin Byung-hwan, reacted to the lawmaker’s assertions. Firstly, Kim acknowledged Upbit’s monopoly structure within the country’s crypto ecosystem.
Also, Kim disclosed that the commission has conducted an intensive review of K-bank’s listing. However, he promised the regulator would engage in another comprehensive review via the Virtual Asset Committee.
Upbit is South Korea’s largest crypto exchange, with a user base of over 80 million. The platform supports over 241 crypto assets and 372 trading pairs. It boasts almost 5.72 million monthly visits and a 24-hour trade volume of over $1.18 billion.
Upbit has made significant compliance efforts with South Korean crypto regulatory standards. According to the Virtual Asset User Protection Act, in July, the exchange implemented reliable measures to eliminate insider crypto trading,
Crypto Market In Turbulence, Potentail More Price Declines?
The crypto market faces turbulence as the bears release more pressure, according to data from CoinMarketCap. Bitcoin and Ethereum have already lost most of their reclaimed value in the past few days, with most assets playing in the red.
BTC has slipped from the $65,000 region and trades at $61,031 as of 06:32 AM EST on October 10. Bitcoin has plummeted by almost 2% over the past 24 hours, while Ethereum’s price now hovers at around $2,393.
Notably, in 2018, the crypto market suffered a significant blow from the event surrounding the investigation of Upbit’s executives over alleged fraud.
So, many fear that while the crypto exchange has gained more dominance globally, the recent probe could drastically impact the crypto landscape.
