Yoojin, South Korea’s major accounting firm has revealed results of an audit of UPbit’s cryptocurrency holdings, confirming that the exchange did not inflate its balance sheet and deceive investors.
An official police investigation into UPbit by the Financial Supervisory Service (FSS), Korea Financial Intelligence Unit (KIU) and local police is still ongoing.
Last week, the police of South Korea raided the headquarters of UPbit to investigate into the practices of the exchange after receiving tips that the exchange allegedly has been processing cryptocurrency trades without actually holding user funds.
The local police accused UPbit of operating its order books without storing cryptocurrencies and pretended that it held large amounts of user funds in Bitcoin (BTC), Ethereum (ETH) and other cryptocurrencies.
The prosecutors also claimed that the company had been transferring funds from customer accounts to a separate account, which was suspected to belong to an executive at UPbit.
At the time, several insider sources have stated that the investigation stemmed from a liquidity issue because UPbit only operated wallets of around 90 cryptocurrencies even though the exchange has 130 cryptocurrencies listed on the platform.
The lack of wallet support for dozens of cryptocurrencies led to the investigation and the government accusing UPbit of inflating its balance sheet.
«Since early 2018, UPbit created snapshots of its multi-signature wallets and funds stored within them for auditing purposes. Yoojin accounting firm, a major accounting firm based in Seoul, confirmed that all of the funds on the UPbit platform match the cryptocurrency holdings of UPbit stored in its multi-signature wallets», – reported MoneyToday.
Despite the investigation is ongoing, UPbit has been fully operational and continued to process trades for its clients. Based on the audit report of Yoojin, it is highly likely that the government investigation into UPbit will end with a simple issue in liquidity and in case the report of Yoojin is accurate, UPbit won’t suffer from any consequence from the recent case as it stemmed from a simple misunderstanding of UPbit’s wallet structure.
The South Korean crypto community has already started to dismiss the UPbit case after the audit report of Yoojin was released and within the next few days, the local financial authorities are expected to reveal the findings of its investigation.