Following a number of regulatory discussions to curb excessive speculation and money laundering, Korean authorities have banned initial coin offerings (ICOs) as well as foreigners and financial institutions from using local exchanges.
In January, CoinMarketCap removed a cadre of South Korean exchanges from their listings, which caused a significant and instantaneous drop in crypto markets around the world.
"UpBit is now under investigation by prosecution, and we are [cooperating] diligently", the company said on its website, according to Google translate. "The analysis is expected to take days", and that the final report on the UPbit case will be released next week. The company added that services such as transactions and withdrawals were unaffected and client assets were safe.
The prosecutor's office said that they suspect the exchange sold cryptocurrency to customers it does not actually hold saying: "We have secured hard disks and accounting books through confiscation".
A point worth noticing here is that Kakao, the South Korean Internet giant is behind this exchange.
Since its inception in October 2017, Upbit's image hasn't' been all clean as in December, the crypto exchange became the center of the controversy when it didn't join other exchanges to support self-regulation.
Upbit launched previous year in October.
Now, the exchange is being investigated by the local police for the illicit moving of customer funds to its executive account.
Even more recently, the major crypto exchange known as CoinNest had its chief executive and co-founder detained on charges of fraud and embezzlement, shocking the entire online community and creating dips in the market as well.
"As the market continues to mature, these events should grow fewer and farther between, and investors will grow thicker skin".