Earlier this week, a crypto exit scam in South Korea called “Pure Bit” disappeared with more than $30 million in user funds.

On November 4, the group conducted an initial coin offering (ICO) to raise nearly $30 million using Ethereum(ETH) to build a cryptocurrency exchange.

On November 13, as CCN reported, Pure Bit and its operators shut down all of their social media handles including KakaoTalk groups, kicking out investors in various public chat groups with the message “I’m sorry.”

Within hours after the incident occurred, every finance and business-focused mainstream media outlet in South Korea reported the case, raising awareness and reporting to the authorities.

One publication went as far to track the Ethereum address of Pure Bit to request Upbit, the second largest cryptocurrency exchange in South Korea, to block the account of the scammers and freeze their funds. Upbit accepted the request and immediately froze the funds.

Weird Turnaround

Cryptocurrency Exchange pure bit exit scam

Possibly due to the involvement of law enforcement agencies and the unexpected support from the country’s mainstream media to provide extensive coverage on the scam, the group already partially refunded several victims and promised to refund all of the remaining funds.

The group released a statement which was reported by BlockchainROK, apologizing for its fraudulent operation. The CEO stated that he was “blinded by money” and made an “unforgivable mistake” that cannot be turned around.

“This is Pure Bit. First off, I would like to apologize to everyone that was affected by the ICO. Since November 5, I raked in 16,000 ETH and did not open a crypto exchange as promised. I kicked out everyone in our social media chat groups and disappeared without any message. I negatively affected investors in the project psychologically and financially.

“I made an unforgivable mistake that cannot be turned around, blinded by money. It has been less than a day and I have already started to suffer from guilt. Although it cannot be compared with the hardship faced by the investors, I also felt significant guilt. I sincerely apologize to all of the investors in the ICO who were affected by the operation.”

The CEO went on to state that the scam project will reimburse all of the funds possible out of the 16,000 ETH, disregarding the fee a third party company received to initiate the ICO on behalf of the group.

Out of Guilt or Fear?

In the statement, the CEO claimed that he was burdened by guilt and ultimately decided to refund victims of the scam.

Over the past several months, the local police, Korea Internet & Security Agency, and the Financial Services Commission (FSC) have put in a significant effort to crack down on scams and crypto exchanges with poor internal management systems.

Given the magnitude of the case and the unprecedented level of media coverage the case received, it is entirely possible that the operators of the scam reckoned the operation went out of control, past the expectations of the group.

After all, an individual with a level of empathy demonstrated by the aforementioned statement would not initiate a scam that could affect millions of people psychologically and mentally in the first place.

This post credited to ccn Images from Shutterstock

Pure Bit, a cryptocurrency exchange in South Korea, has allegedly pulled an exit scam, disappearing with more than $30 million worth of user funds.

On Nov. 9, as BlockchainROK, a trusted news source in South Korea reported, the management team of Pure Bit started to delete social media handles of the exchange and kicking users out of KakaoTalk chat groups.

The official KakaoTalk account of Pure Bit was renamed to a formal phrase in Korean, which translates to “I’m sorry.”

Screenshot of Pure Bit’s KakaoTalk group shared by HanKyung

Initially, around 13,000 Ethereum (ETH) was moved from the address of Pure Bit. Over the last 24 hours, nearly $10 million worth of ETH was moved from Pure Bit’s address.

$30 Million Stolen

According to HanKyung, a mainstream business-focused mainstream media outlet in South Korea, Pure Bit executed an exit scam with more than $30 million in user funds.

Earlier this year, Pure Bit raised $30 million in an initial coin offering (ICO) to create a cryptocurrency exchange. Within months since its token sale, the team behind the token sale disappeared with all of the funds raised during the ICO.

Pure Bit tried to send a portion of the stolen user funds to Upbit, the second largest cryptocurrency exchange in the local market. But, after discovering that the funds from the scam were sent to the exchange, Upbit disabled the account operated by Pure Bit and froze the funds.

Speaking to HanKyung, an expert in the local cryptocurrency sector said that with proper ICO regulations and policies in place, the exit scam could have been prevented.

“The case could have been prevented if the government had implemented proper guidelines and regulatory frameworks related to ICOs. If the government does not establish proper regulations in the short-term, more scams in the local ICO sector could occur.”

In an exclusive interview with CryptoSlate, BlockchainROK founder Heslin Kim stated that the government has not decided whether to completely ban out ICOs or regulate the market.

Kim suggested that, as local publications in South Korea have reported, the government will likely release a statement regarding the legalization or the regulatory state of the ICO market by the end of November.

“These kinds of exit scam scenarios unfold in an unregulated market. Korean legislation has been in a stalemate as to whether or not to fully ban ICOs for over a year now, and we are likely to hear the verdict by the end of November. This will not be a beneficial case study for the pro-blockchain party. However, there is still light in the darkness. STO policy discussions have begun recently and this falls in line heavily with what regulators have been saying is necessary. Is it the decentralized, trustless landscape we all thought would result from the fiat to crypto flippening? No, clearly not, but is it a step in the right direction for the long game? We’ll see.”

Second Exit Scam in a Month

Last week, CryptoSlate reported that MapleChange, a small cryptocurrency exchange in Canada, also pulled an exit scam.

Minor Crypto Exchange Pulls Off Exit Scam, Steals All User Funds
Related: Minor Crypto Exchange Pulls Off Exit Scam, Steals All User Funds

The fraudulent operation of Pure Bit is more of an ICO fraud than a cryptocurrency exchange exit scam, but given that the funds were provided to the company to launch an exchange, Pure Bit has been categorized as a cryptocurrency exchange scam by local investigators.

It remains uncertain whether government regulation will improve the ICO ecosystem or prevent fraudulent operations. Investors will need to conduct proper due diligence before investing in projects, especially ICOs that have complete control over the funds that are sent by investors.

This post credited to cryptoslate  Image source: Unsplash

Choi Jong-Ku, the commissioner of the Financial Services Commission (FSC) of South Korea, has reaffirmed that there exists no issues related to compliance and security in the process of banks providing virtual bank accounts to local cryptocurrency exchanges.

At the state affairs audit conducted by the government of South Korea to evaluate the progress of all government agencies and commissioners in the nation, commissioner Choi emphasized that as long as cryptocurrency trading platforms are well equipped with Know Your Customer (KYC) and Anti-Money Laundering (AML) systems, digital asset platforms will be able to obtain banking services from the country’s commercial financial institutions.

“There exists no issue in banks providing virtual bank accounts to cryptocurrency exchanges. If digital asset trading platforms have KYC and AML systems in place, there is no problem in issuing virtual bank accounts to exchanges,” commissioner Choi said.

In South Korea, crypto exchanges employ a unique system called virtual bank accounts that enable users to deposit and withdraw the South Korean won instantly so that users can hold KRW on exchanges securely.

Crypto Investors Optimistic

In early 2018, the government of South Korea encouraged banks to prevent working with cryptocurrency exchanges to eliminate the possibility of laundering money using digital assets.

While Nonghyup, a major commercial bank in South Korea that has worked with crypto exchanges for over a year, continued to provide services to local exchanges, in mid-2018, even Nonghyup was pressured to end its services to Bithumb and other major cryptocurrency exchanges.

The public statement released by commissioner Choi clarified the stance of the government and local financial authorities towards cryptocurrency exchanges and in the years to come, local digital asset trading platforms will no longer suffer from the lack of banking services from major financial institutions in South Korea.

South Korea Blockchain Association, which represents both small to medium-size and major cryptocurrency exchanges in the local market, expressed its optimism towards the newly established stance of the FSC and added that the initial problem related to KYC and AML introduced by the FSC 10 months ago have been resolved.

Considering the concerns of the FSC and local financial authorities towards security breaches, the South Korea Blockchain Association and the country’s largest cryptocurrency exchanges have initiated the process of obtaining insurance to protect investor funds.

Bithumb, Upbit, Gopax, Korbit, Coinone, and other large cryptocurrencies have also recently been approved by the government of South Korea for having sufficient security measures and internal management systems in place.

In August, security analysts at KISA and the Ministry of Science and IT told local publications that UPbit, Bithumb, Korbit, Coinnest, Coinlink, Coinone, Coinplug and Huobi a have solid ecurity and internal management systems integrated into their exchanges.

South Korea’s Crypto Exchange Market Infrastructure Strengthening Rapidly

This week, Bithumb, the second largest cryptocurrency exchange in the country, eliminated all banking options on its platform apart from Nonghyup, its partner bank.

Investors, confused by the abrupt decision of Bithumb, experimented with emerging crypto exchanges like Gopax, which is financed by the nation’s second largest commercial bank Shinhan.

Gopax, possibly due to the assistance of Shinhan, supports deposits and withdrawals for all local banks in South Korea, along with Kakao and Dunamu’s Upbit.

The competition in South Korea’s crypto exchange market is increasing with key players like Upbit, Gopax, Coinone, and Korbit gaining more market share, offering investors with several alternative options.

This post credited to ccn Image from FSC.

The conducive developments in South Korean crypto space have boosted fiat influx into the market, reveals this month’s data.

eToro eanalyst Mati Greenspan pitted Korean Won against the most volumed bitcoin-quoted assets, including the US Dollar, Euro, the Pound and also Tether. The comparison revealed a dramatic surge in the BTC/KRW trading volume compared to other instruments that remained mostly stable throughout this October.

SOURCE: CRYPTOCOMPARE.COM

Japanese Shift Theory

While the Korean Won volume surges against Bitcoin, the one that fell in response is that of the Japanese Yen. At the beginning of October, the KRW volume covered 3.39 percent of the Bitcoin market, while the BTC/JPY – at the same time – covered 11.96 percent. By mid-October, the KRW trades had gone up to as much as 41 percent while the JPY toppled to as low as 1 percent.

Australia’s Finder theorized that Japanese investors could be moving their Yens into the South Korean Bitcoin market over security concerns. Japanese crypto exchanges this year had gone through a few high-profile hacks, in which swindlers stole $600 million of cryptos. The yuan trading volume is on its way to the south ever since the hack at Zaif exchange in September.

The October Yen volume on BitHumb, nevertheless, has attained its initial value already and is now covering 12 percent of the overall Bitcoin market. Korean Won yet remains the leading fiat currency by volume in October, beaten only by Tether that is not state-backed.

USDT Volume Depleting

BitFinex still has a lead over other exchanges in Bitcoin-to-dollar trades. It is further reflective in the dominance of Tether’s USDT – a BitFinex-supported stablecoin – over the bitcoin volume charts. Nevertheless, the coin is losing its sheen after being criticized for non-disclosure of US reserves. A considerable number of traders has shifted to other stablecoins. Many have parked their crypto assets in fiat also, which explains a volume shift towards the Won.

The deviation between USDT and Won volume is visibly more than the divergence between Yen and Won on half-yearly charts.

BTC/KRW Price

The high volume did not reflect upon the way Bitcoin is trading against the Korean Won. Another chart sourced from BitHumb and TradingView.com reveals that the BTC/KRW pair is trending sideways on daily charts for quite a time. It could mean that while trading on the exchanges has increased, the Bitcoin demand is in equilibrium with its supply. It further explains that the high volume does not specifically signify South Korean investors’ interest in the crypto.

The overall bias in the Bitcoin market is turning bullish after the extension of its stability action. Especially in times when the mainstream stocks are underperforming, Bitcoin is rock steady compared to its volatile swings in the past.

This post credited to News BTC Image source: News BTC

ICON, South Korea’s most valuable blockchain project, has partnered with the country’s biggest telecommunications conglomerate SK, to possibly utilize blockchain technology and crypto in compensating users of its mileage system.

SK Planet, a subsidiary of SK that signed a memorandum of understanding (MoU) with ICON, operates the most widely utilized mileage system in the country that has nearly 35 million users, more than half of the country’s population.

In the months ahead, SK Planet is expected to collaborate with the ICON team to utilize its blockchain technology in supporting mobile services as well as its mileage system OK Cashbag.

Monumental Partnership

In July, Hani, a mainstream media outlet in South Korea, reported that OK Cashbag, the mileage system of SK, has initiated the process of developing a blockchain-based system to handle mileage payouts and various business models.

“OK Cashbag has approved the initiation of OKX Project, a blockchain technology-based project, and is currently in a phase of reviewing various business models and incentivization methods. But, SKPlanet will not engage in any initial coin offering (ICO) or fund raising pertaining to OKX Project,” Hani reported.

At the time, SK Planet did not provide any additional information on the technical intricacies of its blockchain project nor any partners the company intends to work with to streamline the process of integrating blockchain technology into its existing infrastructure.

The MoU signed between ICON and SK Planet has demonstrated the long-term strategy of SK to actively pursue its plans to integrate blockchain technology. Experts have suggested that the partnership between ICON and Line, one of the biggest messaging apps in Asia, encouraged SK to work with ICON to release its first blockchain product.

J.H. Kim, the council member of ICON Foundation said:

“Through cooperation with SK Planet, which has OK Cashbag and Syrup services already being widely used by the public, ICON will keep up the hard work to popularize blockchain.”

SK Planet executive JM Park added that the conglomerate will cooperate with small and medium-size enterprises to commercialize the blockchain across Asia. He explained:

“Blockchain appears to be one of the key technologies that will promote market transformation in existing industry for the medium and long term. SK Planet will work with ICON to derive synergies in various fields so that we can offer differentiated benefits to our customers.”

Major Conglomerates are Going Full Crypto and Blockchain

In South Korea, LG, Samsung, SK, and many other multi-billion conglomerates have continued to show increasing interest towards the blockchain, possibly due to the acknowledgement of the technology the government of South Korea as one of the three pillars of the fourth industrial revolution, alongside AI and big data.

Samsung has been operating a foundry to manufacture crypto ASIC miners, SK has financed major cryptocurrency exchange Korbit, and Kakao has been supporting Upbit, the country’s largest cryptocurrency trading platform operated by Dunamu.

The partnership between ICON and SK Planet can be considered as the first major step towards materializing the plans of the conglomerate of utilizing crypto to compensate the users of OK Cashbag mileage system.

This post credited to ccn Featured image from Shutterstock.

One of South Korea’s biggest commercial banks, Shinhan, has announced that it will use the new high-speed blockchain platform developed by one of the country’s biggest mobile providers, KT.

Per news outlet Joongang Ilbo, KT and Shinhan will look to apply blockchain-powered solutions to “new business” areas, particularly in the financial and public sectors.

Shinhan has shown an enormous willingness to develop cryptocurrency- and blockchain-related business in recent times.

Last year, the bank reportedly tested a virtual bitcoin vault – an alternative safe storage system for investors wary of using third-party wallet services or storing tokens in exchange accounts.

Shinhan is one of a small group of South Korean banks that allows exchange cryptocurrency customers to withdraw and deposit Korean won via government guideline-sanctioned real-name, social security number-authenticated accounts.

The bank has also been looking at blockchain-powered B2B financial transfer technology, in conjunction with banking partners in Japan and South Korea.

Now, the bank and the telco also plan to help local authorities in the country provide high-tech funding solutions – by providing blockchain-issued, tamper-proof “gift” certificates to companies or organizations to whom they wish to provide financial support.

The move comes as a major boost for KT, which has been searching for high-profile partners since it announced its 100,000 transaction-per-second blockchain platform last month.

KT has been hoping to steal a march on its arch telco rival, SK, which is working on a platform that it says will allow customers to manage their financial assets online.

 

This post credited to cryptonews  Image source: iStock/opolja