Three officials at Upbit indicted for making false bitcoin orders to attract customers

The major crypto exchange denies the allegations.

Upbit, a major crypto exchange in Korea, has been indicted for filing false crypto orders in attempt to attract more customers, Korea Herald reported Friday (via. Crowdfund Insider).

The indictment specifically concerns the firm’s board chair, finance director and a “working-level official.” The Seoul Southern Seoul District Prosecutors’ Office alleges that the three spent two months placing false orders for crypto transactions in an attempt to drive inflation and invite customers to the exchange.

The company has also allegedly been submitting fake orders worth over 250 trillion won since October last year, in order to give the appearance of having a large number of investors.

Meanwhile, Upbit received a sizeable profit from the sales fees collected from customers. Korea Herald reports that the trio sold 11,550 bitcoins to about 26,000 customers, accumulating a total of 150 billion won. That’s about $132 million, or £104 million.

Upbit, on the other hand, said that it had provided liquidity to its corporate account during its opening launch phase, and that it had not used these methods to turn a profit.

“The Company has no intention to sell or sell fraudulent transactions such as prosecution announcements, sells passwords that it does not hold, or in the course of which the Company and its employees take profits.” states a post published on the company blog.

Upbit claims it completed some biotransactions for marketing for the two months under question by prosecutors, but maintains that this did not affect the market, which was around 3 percent at the time.

This follows a separate fraud case opened against Upbit earlier this year, for which 11 workers were detained on fraud and embezzlement charges, notes Korea Herald.

Last month, South Korean financial regulators issued a request requiring all South Korean banks to limit their cryptocurrency services to “unverified crypto traders,” following reports of significant illicit crypto trading operations occurring in South Korea at the beginning of this year. The new legislation will only allow these traders to withdraw money, without being able to make deposits.

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