South Korea’s leading crypto exchange, Upbit, and its parent company, Dunamu, have recently celebrated a victory as the nation’s Supreme Court acquitted Dunamu’s Chairman Song Chi-hyung of fraud charges. The charges were related to allegations of manipulating platform data by creating fake member accounts on Upbit to artificially boost trading volumes. This article delves into the details of the case, the court’s ruling, and the implications it may have for the crypto industry in South Korea.
Allegations and Prosecution
The prosecution had accused Chairman Song Chi-hyung and a group of executives of manipulating order volumes through fake member accounts on Upbit. They asserted that these fabricated accounts were created between September and November 2017 and were used to buy and sell Bitcoin. The group allegedly moved BTC 11,550 across 26,000 wallets to artificially inflate trading volumes, resulting in almost $93 million worth of transactions. Additionally, they claimed that these “fake customer” transactions generated profits of nearly $114 million during the bear market.
Initially, a district court had cleared Chairman Song and the executives of all charges. This decision was upheld by a branch of the high court. However, prosecution officials were determined to pursue the case further, leading to its ultimate culmination in the Supreme Court. Surprisingly, all three courts not only acquitted the defendants but also criticized the prosecution for using “illegal methods” to obtain evidence.
The court proceedings revealed that the prosecution had gained unauthorized access to information from Dunamu’s Amazon-provided cloud accounts. Defense attorneys argued that the search warrants issued did not grant officers the right to search remote servers. Furthermore, they contended that the prosecution overstepped their authority by seizing the laptops and USB storage devices of the executives.
Despite the legal hurdles faced by its Chairman and executives, Upbit has managed to cement its position as the leading cryptocurrency exchange in South Korea. Initially trailing behind Bithumb, Upbit has surged ahead to capture approximately 80% of the domestic market share. This remarkable achievement can be attributed, at least in part, to its successful partnership with the neobank K Bank.
The collaboration with K Bank has provided Upbit’s customers with the convenience of opening wallets and associated bank accounts online, a requirement under South Korean regulations. Crypto traders are mandated to create real-name verified bank accounts linked to their wallets. Traditionally, some banks insisted on customers visiting branches in person to set up these accounts, but with K Bank’s support, Upbit has been able to streamline the process.
The acquittal of Dunamu’s Chairman and executives is seen as a significant development for the crypto industry in South Korea. It highlights the need for fairness and adherence to legal procedures, even when dealing with high-profile cases involving crypto exchanges. The courts’ criticism of the prosecution’s methods of obtaining evidence sends a clear message that illegal practices will not be tolerated.
This ruling may also restore confidence in Upbit and the broader crypto market. With Upbit now enjoying a dominant position in the country’s crypto scene, its continued success could encourage greater participation and investment in digital assets by South Korean individuals and businesses.
The Supreme Court’s acquittal of Dunamu’s Chairman and executives on charges of manipulating platform data comes as a significant win for the company and the crypto industry in South Korea. The court’s decision not only cleared the defendants but also emphasized the importance of upholding legal procedures and fairness in prosecuting such cases. With Upbit’s leading position in the market and its successful partnership with K Bank, the stage is set for further growth and development in South Korea’s crypto landscape.