South Korea’s Financial Services Commission (FSC) has started a probe into Upbit, one of the biggest bitcoin exchanges in the country, because it might have too much power in the market. As was said, this investigation is mostly about Upbit’s relationship with K-Bank, an online bank that has been very important to the company’s growth.
Since it started in 2017, Upbit has quickly grown into a big player in the world of cryptocurrency exchanges. Every day, around $1.2 billion worth of trades happen on Upbit. But because it has such a big part of the market, officials are keeping a close eye on it.
During a government audit, lawmaker Lee Kang-il raised worries about Upbit’s large impact on K-Bank’s deposit base. This led to the investigation. There have been reports that Upbit’s funds make up a big part of K-Bank’s total savings. This has caused concerns about the bank’s security, including the chance of a bank run.
Because of these worries, FSC Chairman Kim Byung-hwan agreed that Upbit’s business structure and its financial ties with K-Bank needed to be looked at. As of September 15, the Electronic Financial Transaction Act went into force. He stressed how important it was to look at this situation again shortly.
K-Bank has been linked to Upbit since at least 2021. They just recently filed for an initial public offering (IPO) that could bring in a lot of money and make it one of the biggest public listings in South Korea in almost three years. Reports saying that up to 70% of K-Bank’s savings are linked to cryptocurrencies have made people even more worried about Upbit’s power. This could put the bank’s finances at risk if market conditions change.
Even though there are important problems raised, Upbit has not yet made a public statement about the investigation. In the meantime, the exchange has announced that it will be performing server maintenance on October 14. During this time, crypto deposits and withdrawals will be briefly stopped. This shows that the exchange is still focusing on maintaining working security while regulators keep an eye on it.
