Crime has always been a problem on the blockchain. In the beginning days of Bitcoin, the currency garnered the interest of major main news outlets for its common use in the underground dark markets for the sale of contraband. But in recent years, the currencies of the digital world have grown up.
While cryptocurrencies continue to develop and the financial interest in their trade proliferates, major outlets have become interested in the technologies for an entirely new set of troubling legal reasons. Fraud within the blockchain community is rampant, and the introduction of crypto exchanges in many countries has created a laundry list of regulatory and extralegal concerns.
South Korean Exchange Upbit in particular has been hit hard by regulatory scrutiny and its fair share of controversies by no-good traders committing crime on their servers and using their platform. The company has recently taken on a new strategy for dealing with increasingly intelligent professional scammers within the blockchain and crypto community.
Upbit recently paid six individuals for reporting crypto scams on their network. Out of ten cases reported to the company, these six incidents were selected, and their reporters paid a hefty sum by the organization for their compliance and information.
Upbit Bounty Program
In the past, internet bounty programs have been largely successful. As a way to both engage in the community and respond to key threats to the security of the network, offering a cash bounty for reporters is an effective way to redress issues.
The Upbit bounty system was first introduced in March. The exchange company outlined that users would be rewarded for reporting fraudulent scams within the cryptocurrency market. Specifically, the company wanted to respond to multi-level scams which posed as normal, legitimate Initial Coin Offerings.
The first round of reports were successful, with the company shelling out around USD $930 to the applicants whose reports turned up successful investigations. The organization required applicants to submit the necessary information regarding criminal activity on the crypto market to relevant authorities. Even when the investigatory organizations did not follow up, due to either improper evidence or other reasons, Upbit paid its applicants anyway.
Continuing Security Efforts
Upbit’s efforts to beef up security on their exchange don’t end with their new bounty program, either. The company has gained international attention for its integration of the world-check system. This risk intelligence solution automatically runs user information given during registration through their data. When the data turns up a risk high enough in relation to crime or terrorism, it immediately terminates the registration process.
The integration of this system is the latest move in a series of efforts by the South Korean exchange to up security to meet market demands and give themselves an edge in the competitive field.
The company needs to do something, too. The eighth biggest exchange in the world, it lost its place as the largest SK exchange to Bithumb earlier this year. The security efforts seem to be intentional moves to garner additional interest in the exchange.