On the 23rd, Rep. No Woong-rae's side raised allegations of Upbit's illegal foreign exchange transactions
Upbit denies, stating overseas remittances are fundamentally impossible
[Asia Economy Reporter Gong Byung-sun] Dunamu, the operator of the domestic cryptocurrency exchange Upbit, denied allegations of illegal foreign exchange transactions (hawala) raised by some, stating that it only has business partnerships with its Singapore, Indonesia, and Thailand subsidiaries and no equity relationships.
On the 28th, Dunamu stated, "Dunamu and Upbit APAC have a business partnership, not an equity relationship," and added, "Each Upbit APAC entity operates with local licenses and permits in their respective countries."
Earlier, on the 23rd, Roh Woong-rae, a member of the Democratic Party of Korea, claimed in a press release that "the scale of foreign exchange violations, including hawala through cryptocurrencies, reached 1.6 trillion KRW in the first half of the year," and "the police are expected to soon launch an investigation into Upbit for allegedly setting up paper companies in Singapore and Indonesia to conduct hawala." Roh’s side argued that illegal foreign exchange transactions were possible without reporting procedures under the Foreign Exchange Transactions Act because the order books were shared.
In response to Roh’s paper company allegations, Dunamu rebutted, "Upbit APAC is a Singapore-based corporation established in February 2018, and its subsidiaries in Singapore, Indonesia, Thailand, and other countries operate with digital asset exchange business licenses from local regulatory authorities," adding, "The Indonesian and Thai subsidiaries were established as joint ventures (JVs) with local partners."
Furthermore, Dunamu asserted that it has no equity relationship with Upbit APAC and its subsidiaries. Dunamu explained, "It is merely a business partnership that enables order book linkage between the Bitcoin market and the Tether market, and we provide technical support and license usage permissions under a business agreement." They emphasized that the order book linkage service allows members of overseas partner exchanges in Singapore, Indonesia, Thailand, and others to place orders on the Upbit order book and facilitate trade execution. Upbit is similar to the Nasdaq in the U.S., and the overseas partner exchanges are akin to domestic overseas stock trading platforms.
Dunamu also explained that it is impossible to conduct hawala because there are no fund transactions with Upbit APAC. Dunamu stated, "When establishing Upbit Singapore, the first subsidiary of Upbit APAC in 2018, we requested a bank to remit capital for overseas expansion investment but were refused," adding, "We tried to obtain approval for overseas direct investment reports under the Foreign Exchange Transactions Act, submitted the overseas direct investment report and supporting documents, and limited the use of funds to subsidiary establishment capital, but the remittance was still impossible." They further noted, "There was no specific reason for the refusal other than it being a government policy, and the situation remains the same," and added, "Upbit APAC started with only 500 million KRW invested by Kim Guk-hyun, the CEO of Upbit APAC."
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