Crypto seeing red as UPbit gets raided

in #upbit5 years ago (edited)

The cryptocurrency markets are awash in red today as news out of South Korea is likely the driving factor.


According to Coindesk, prosecuters in South Korea have raided the largest cryptocurrency exchange in the country, UPbit.

It isn't entirely clear exactly what UPbit is being investigated for as several reasons have surfaced.

First it was rumored that UPbit was basically embezzling from customer accounts and transferring coins into their own accounts.

Then later that was updated to say that Upbit was instead selling cryptocurrencies to clients that it didn't actually own.

This was the updated quote from Coindesk:

"UPbit is suspected of fraud for allegedly selling cryptocurrency to customers that it does not actually hold, according to the report. We have secured hard disks and accounting books through confiscation. Analysis is expected to take days."


On first glance that sounds bad, but it could also be something that is a part of the normal market making process.

Stock exchanges in the US routinely sell shares that they don't actually own, they do this to provide liquidity for their customers and to "keep an orderly market".

The trades are eventually settled by transferring shares between exchanges so there is no harm done.

What has gone on here is anyone's guess at this point, but the fact that the local authorities are involved probably means there was some kind of nefarious activity going on.

In general, regulators don't like to take action unless they have proof of something.

What this means going forward:

In general it shouldn't have too much of a long term impact.

Regulation among these markets was coming already and this is just another example of why it is needed.

When there is a lot of money at stake, people have proven time and time again that they need to be policed.

That being said, we could continue to see a bit of weakness in the very short term due to a customers selling out of UPbit.

Though, in my opinion, those sellers will likely eventually move their money and holdings to other exchanges and we will continue on with business as usual.

Could possibly have some effects on Steem and SBDs going forward.

One thing to keep in mind regarding Steem and SBDs is that the UPbit exchange was the largest exchange in terms of volume for both Steem and SBDs.


How UPbit being under investigation affects those two is anyone's guess.

If the exchange were to be shut down it may affect them negatively, though it being shut down doesn't seem likely to me.

UPbit has likely been responsible for some of the current premium in SBDs, though.

Stay informed my friends.

Follow me: @jrcornel



The drop also could have had something to do with the Mt. Gox bankruptcy trustee...

Interesting that they got reported to fraud. This will be good in the short term. Crypto always recovers from FUD. I hope UPbit and the regulators get this settled out, that'd be interesting if they were actually creating fake clients to provide more liquidity. Crypto is still such a wild Wild West, a lot of manipulation and money making is occurring right now.

It stinks that Steem and SBD went so low. It's time to pick up some more Steem to power up :P. Does anyone else have a goal of getting to 10,000 SP?? At $100 for a price of Steem you will be a millionaire.

You think it goes to $100?

Yes, Steem just gets just 5% of Facebook's market cap in tandem with the same user growth, it will be worth $115 a coin. Don't be surprised if it does one day. Once people realize they can get real money from posting good content and interacting on a social media platform, the sky is the limit. Nothing is for certain though as nobody can predict the future, but I'm surely optimistic :)

Not alot of support between here and $6.4K, maybe one ledge over the edge, but that's about it.

My thoughts as well. Where do you think we go?

i bet his cousin starts shorts few minutes before he makes the transfer and it hits all medias

The Mt Gox trustee's cousin?

This is crypto normal correction.

I wondered why all the bleeding today.
Thanks for the heads up.

I think the down turn of the crypto market has to do with the value of a satoshi. As Bitcoin goes down so does the Dollar value of all cryptos. And BTC and ETH have been in sync lately. Plus this is a normal market correction. You should not expect BTC to never correct itself. Well within expected price movements.

BTC 5-11-18.png

Do prices hold up here or have further to fall?

Do you agree that it should be only short term haircut?

I wondered why sbds and steem prices depreciated now i got my answers.

That sucks in the short term, for crypto in general and steem/sbd specifically, however anyone who was buying steem on Upbit who wants steem can still get it, and this is not going to be a major issue outside of its short term impact.

I am here on steemit for the long term, $8 Steem isnt #moon, $1,000 or $2,000 Steem is #moon. That's not going to happen overnight, and what ever happened with Upbit is not going to change the trajectory of Steemit, the Steem platform or cryptocurrency.

Thanks for the post.

This will probably happen every week. FUD FUD FUD

I was watching price on Steemworld, Market crash in seconds, Sbd was 2.95 and it suddenly landed to 2.2,

Yea that was not fun.

things are recovering a bit now

Bad news! South Korea drives the market. India and China make the market too.

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Personally, I've never trusted the Market Maker story, being that they provide stability and liquidity to markets. I think the are more often the tool of fraud and manipulation, like Enron did with energy commodities.

I once lost $80,000 if a fraction of a second, pre-market open, on a small pharmaceutical company when bots dumped the stock. A report for a delay in FDA approval had been release at 8:00 AM Eastern, and by 8:00:20, the stock lost 70% of its value. Since the stock was 80% owned by large institutional, more shares had been sold than should have been available. "Market Makers" were, I believe, naked short selling, that is, selling shares they didn't have, in order to tank the stock and then keep it down for weeks. After that, nobody wanted the stock and I never recovered my losses.

Hopefully, the same thing doesn't happen here...

I have seen things like that happen as well, where the daily volume exceeds the entire available float. Which likely means extra shares were created, though it could also just mean the same shares were traded multiple times over and over. Tough to tell sometimes.

Yup. But whatcha gonna do...stay home? :^)

Upbit has been in the top 5 cryptocurrency exchanges in the world in terms of volume. I never transferred any funds to upbit because it seemed too shady.

It sucks to see that this may be influencing the cryptocurrency market. I thought there would be a definite up trend for BTC. I guess I'll keep holding though.

Same here. It will be interesting to see if there is any kind of recovery leading into the Consensus conference. We are at a pretty critical level on the charts right here.

welldone,good inform

Why the heck South Korea has always something to do with these red crypto days? What in the world are they doing!!!

so sad news, day by day everything goes to bad said but why???????
why pac... gone?????

Some bad news for Steem and sbd :(
Hopefully, we will get some good too!

sir @jrcornel people who commute a fraud that leave exchange coins to buy after exchange. Even in exchange, all transactions will be on their own shares, but the crypto exchange does not work the same.

upvoted and restem

@jrcornel sir I noticed the effect of steem and sbd Protect the investors who ultimately believe in running these third parties. It strengthens the importance of having control over our wallets outside of the exchange. It shows the continued development and acceptance of decentralized exchanges.


so nice post. I really like your post. People leave the coins in the exchange after buying which gives these exchanges liberty to commit a fraud like this. Even on exchanges, all transactions are settled to people own thr own shares but crypto exchanges don't work the same.

I did not notice the impact of STEEM and SBD was related to this so thanks for that information. Like you say, making markets in assets sales is normal but when in a regulated environment. This unfortunately adds to the fuel for regulators to step in and correctly defend investors who are ultimately trusting these 3rd parties to execute. This also reinforces the importance of having control of our wallets outside of exchanges. It also demonstrates the need to continued development and adoption of decentralized exchanges. These things happen in immature markets but participants learn and adjust; no need for a panic sell off in reality.

Yep, well said.

@jrcornel wishes.

people leave thr coins in the exchange after buying which gives these exchanges liberty to commit a fraud like this. Even on exchanges, all transactions are settled to people own thr own shares but crypto exchanges don't work the same.

Great point.

So sad to read about UPbit that was very big exchange a lot of people put their money there i hope they will get it back

As an unemployed person Steemit is my reliable source to maintain family. I am seeing dark on my my eye from your post.

My wallet is almost all red. Though I have different altcoins and tokens (EOS, BRD, PKT etc) There will be a correction, no point for panic until its a long term bear period!

South Korea. It was an informational post. It is all hope that this will do something good in this country. Thank you for all of us. Go ahead in your own way

This is look like a great to buy for my eyes , the market will cover up from that us well

Fundamentally this doesn't change a whole lot. From that perspective you are probably right, the only question is how much will it dip on this news in the short term?!

Sounds a bit like Wall Street, but is that so bad? And how could we, the market participants, do something? It shouldn't really matter if they have the bitcoin at hand. And hear me out here. In the futures market not every security is backed by the underlying stock or commodity. It is just assumed that if need be the orders can be fulfilled. If the exchange is "selling coins they didn't have" that just means they have assessed the risks of doing so. It's simply working the leverage of your money. Not saying its right or wrong, but it should make you think about why you hold your cryptos in an exchange... They wouldn't be able to do anything of this nature if everyone took their cryptos in their own hands.

That is pretty similar to my thoughts as well. It almost sounds like it could be normal market making activity. We won't really know for sure until the authorities release a statement on their findings.

Yea, I think that the market is so young that the average person blows news like this out of proportion. Companies like apple or the NYSE or any other big company get sued regularly. This shouldn't be as big of a problem as it has become

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