The South Korean cryptocurrency exchange affiliated with Kakao Talk has recently become the center of regulatory controversy. Upbit is the only major exchange in Korea that has not joined the other exchanges in support of self-regulation. Their agreement with Bittrex raises the question of how the regulation applies to them. Meanwhile, the exchange is having its own internal problems as customer complaints mount.
Upbit at the Center of Controversy
Upbit is the cryptocurrency exchange integrated into South Korea’s most popular chat app, Kakao Talk, which is installed on over 95% of all smartphones in the country. Over 120 cryptocurrencies are listed on the platform, thanks to a partnership with the US-based exchange Bittrex. By offering the largest selection of cryptocurrencies in Korea and leveraging the Kakao Talk’s user base, Upbit has become the fastest-growing crypto exchange in the country since its launch in October.
The exchange’s website displays its 24-hour bitcoin trading volume as 44,040 BTC at the time of writing, which would put it ahead of the country’s largest exchange, Bithumb, which recorded approximately 20,250 BTC in the same time period.
“However, there are concerns that Upbit, which is the number one player in Korea, is not participating in the Blockchain Association’s self-regulation,” Inews24 reported, adding that this could undermine the industry’s efforts.
The Korean Blockchain Industry Association announced on Friday the self-regulatory measures, created at the recommendation of the government. 14 exchanges have jointly declared that they will implement the changes, including the country’s other major exchanges – Bithumb, Coinone, and Korbit. Citing “Upbit is not a member of the Blockchain Association and has no obligation to comply,” the publication noted:
Upbit did not participate in the joint declaration [of self-regulation] issued by major exchanges.
According to the association, Upbit was informed about the self-regulation but the exchange has not confirmed whether it would join the group. “We are currently reviewing the self-regulation and there is no decision about joining the association,” Newspim quoted an Upbit official disclosing.
If Upbit does not join the association and is not subject to self-regulation, there will be a problem with equality among domestic exchanges, the publication detailed. In addition, other exchanges may follow suit and withdraw from the association, rendering the self-regulation useless.
“As the government is watching the virtual currency trading market, the industry is trying to eliminate its negative image through self-regulation,” an exchange’s official commented. He voiced the concern that the lack of cooperation by Upbit could give negative signals to the government.
Kim Jin-hwa, one of the leaders of the association, described:
Upbit is operated by importing coins listed on the US exchange Bittrex, which is different from a typical domestic exchange. It is uncertain whether regulations like other exchanges have can be applied.
In the meantime, Upbit has already begun complying with the government’s ban on minors. The exchange posted a notice on its website on Monday informing its existing underaged customers to trade and withdraw money by December 31.
Upbit’s Growing Problems
Since its launch in October, the Upbit platform has continually been experiencing problems. Customers began complaining in November about issues such as missing funds and transaction errors, according to local publications. The exchange acknowledged the problems when it posted a notice on its website Monday, stating, “We are currently doing our best to stabilize transactions.”
However, one Upbit user was quoted by Etoday on Tuesday saying, “This is not a server problem, but a manipulation.” The user claimed, “If you look at the transaction history, the unit price is not correct,” adding that he would pursue litigation and compensation. Another user said he bought 3 million won worth of bitcoin but only 1.8 million won worth showed up in his account. Many others have reportedly experienced similar problems.
Upbit explained, “We are delaying the reflection of BTC market due to the increase in current access / order volume.” The company also posted a notice describing, “Currently, Kakao Talk inquiries are rapidly increasing and it is difficult to respond promptly.” Moreover, the exchange announced on Monday:
We will temporarily stop transaction support for Upbit’s new members…Existing members will be able to perform all transactions without any changes.
What do you think of Upbit not joining other exchanges in implementing self-regulatory measures? Would you use Upbit? Let us know in the comments section below.
Images courtesy of Shutterstock, Kakao, Upbit.
Need to calculate your bitcoin holdings? Check our tools section.