In a significant development that is set to shake up the current crypto market sentiment, South Korean authorities have initiated an intense investigation into the country’s two largest cryptocurrency exchanges, Upbit and Bithumb. This action follows the recent revelation of a high-profile scandal involving a former lawmaker and his questionable cryptocurrency transfers.
Upbit And Bithumb Face Legal Scrutiny
South Korean legal authorities have conducted a thorough search of accounts at the country’s leading cryptocurrency exchanges, Upbit and Bithumb. This action pertains to transfers carried out by ex-lawmaker Kim Nam-kuk on Monday. In addition, Kakao’s messaging application also fell under scrutiny as Kim reportedly used its Klip cryptocurrency wallet for transactions, as reported by CoinDesk Korea.
Since the previous week, Rep. Kim Nam-kuk, associated with the Democratic Party of Korea, has found himself tangled in allegations of conflict of interest. These accusations stem from cryptocurrency withdrawals he made in 2022, raising questions about the appropriateness of his actions.
Kim is also under scrutiny for allegations that he engaged in cryptocurrency trading during the National Assembly’s judiciary committee meetings in May and November of the previous year, according to a report by CoinDesk Korea. Despite portraying himself as a modest politician, it was discovered that he owned 800,000 WEMIX tokens, valued at 6 billion won ($4.5 million), during the months of January and February 2022.
Ruling People Power Party Launches Internal Task Force
Kim Nam-kuk stepped down from the Minjoo party on Sunday, following revelations that surfaced over a week ago about his ownership of approximately $4.5 million in wemix coins during 2021. This information aligns with previous reports made by several news sources two years ago.
At this point, it remains unclear whether Kim had any unfair advantage such as access to privileged information that might have assisted his investment decisions, or whether he was gifted free coins by virtue of his political stature.
Wemix said in a blog post: “Reports to the effect that WeMade illegally supported Wemix or provided internal information related to investments to members of the National Assembly are completely untrue.”
Korean prosecutors launched a search operation on Monday at Upbit and Bithumb, the platforms where Kim is purported to have his digital wallets, as part of their ongoing investigation into Kim’s affairs.
The report suggests that transaction records were confiscated during these searches.
This controversy has also triggered an in-house investigation by the ruling political party into Kim, following accusations of him engaging in cryptocurrency trades during parliamentary sessions.
Throughout his political career, Kim supported regulatory legislation that would classify certain gaming revenues as cryptocurrencies.
The unfolding of Kim’s crypto scandal coincides with South Korea’s ongoing efforts to regulate the cryptocurrency industry.
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Shayan Chowdhury
Shayan is a digital nomad and a professional journalist. He delivers high-quality engaging articles to Coinpedia through his in-depth research and analysis.
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Crypto exchanges Upbit and Bithumb are under fire after the South Korean authority launched an investigation into the exchanges following a crypto scandal involving an ex-lawmaker.
The investigations revolve around a scandal involving Woo Byung-woo, a former four-term lawmaker from the Democratic Party, in which he is suspected of money laundering and violation of public fund regulations through crypto trading transactions. According to reports, Woo has been accused of using illicit accounts from exchanges Upbit and Bithumb to build up his crypto fortune.
Upbit and Bithumb, two of the country’s largest crypto exchanges, have thus come under scrutiny due to their alleged roles in the scandal. The Financial Services Commission (FSC) and the Ministry of Justice are both conducting their own investigations into the matter. The FSC has begun a crackdown on the South Korean crypto industry, warning investors against the dangers of crypto trading and stressing that it is not currently comfortable with the industry.
The investigations have stirred up a bit of controversy in South Korea, as the country is considered a hotbed for cryptocurrency and blockchain technology, due to its tech-savvy population and progressive attitudes towards digital assets. Crypto exchanges have experienced a surge in success over the past few years as a result of the country’s favorable conditions, making it an attractive target for authorities.
At the same time, many exchanges have also been accused of lax security protocols and negligent customer service. These issues must be addressed before regulators can provide the necessary protections for investors and users of the exchanges. However, it is still too early to tell the outcome of the investigations.
In the meantime, it is important for investors to exercise caution when participating in crypto trading and to be aware of all the associated risks. Investors should also stay abreast of any developments in relation to the investigations in South Korea, in order to stay informed and make more informed decisions.
