Upbit Blames South Korea’s Taxation and KYC Hurdles in Foreigners’ Frozen Funds Saga
Upbit crypto exchange woes are still on after it emerged that foreign clients to this South Korean firm are yet to withdraw their ‘frozen’ funds. The platform suffered a blow when close to $50 million worth of Ether was stolen upon a successful hack towards the end of 2019.
Most of the affected clients are from China with over 6,000 crypto traders’ assets being frozen; they cannot even withdraw using the Korean Won. This group has since concluded that Upbit may be on its way to insolvency and also understated the financial damage caused by November’s 2019 hack. So far, organized efforts to have Upbit act on its obligations have been futile.
The Korean crypto exchange came out to clear the air on why they are yet to release frozen funds. According to them, structural hurdles under the legalities of financial markets have mainly contributed to this situation.
Top of the list is an internal Korean tax obligation under review; this came up after the authorities took a look of Upbit’s reports in December. The firm however highlighted that,
“Upbit has been working closely with the tax authority to ensure accurate taxation standards, and also with tax experts to review taxation standards by country.”
The other hurdle is a KYC process that has been prolonged despite Upbit submitting updated clients’ records upon request last year. New regulatory pressures from Korea’s regulator may have actually caused this delay given the financial attention and scrutiny triggered by Upbit’s hack.
Users who submitted their ID’s afresh are now wondering whether they are safe or more exposed? This is quite frustrating for them and only time can reveal if indeed Upbit is being truthful in its excuses.