South Korean crypto exchange, Upbit, started to block withdrawals for its foreign users back in December 2019. Initially it was thought to be in response to the hack that took place, but now it seems it may have something to do with the company’s outstanding tax fine.
Was the Upbit hack worse than initially reported?
Over 6300 Chinese crypto traders have been prevented from withdrawing their funds held on Upbit since December when initial reports started coming in. The month prior, on November 27th, Upbit was hacked for 342,000 ETH.
Many Chinese investors assumed that Upbit froze withdrawals while the hack was being investigated. As new information comes to light, however, this may not be the case at all. Now it seems that Korean customers have been able to withdraw funds again, while foreign customers have not.
Foreign investors have speculated that perhaps the Upbit hack was actually much worse than reported.
The account freeze may actually have to do more with fellow S. Korean exchange Bithumb’s recent $70 million dollar tax fine from S. Korea’s tax collection agency. Victims have speculated that their funds may have been used to pay taxes to avoid a Bithumb style “tax bomb”.
Another factor, might be an Upbit executive’s recent prison sentence for fraud. Song, an Upbit Senior Executive, and a gang of accomplices used fake IDs to simulate 122 billion Korean Won worth of trading volume on the exchange.
The whole situation for now is still unknown, as Upbit has failed to respond to inquiries regarding the circumstances of the frozen funds.
Upbit has told foreign traders that they are implementing “stronger AML/KYC” for FATF compliance,