South Korean regulators are getting very serious in fighting fraud in cryptocurrency markets, as evidenced by the raid in UpBit, the largest cryptocurrency exchange in the country on Friday, and the two other exchanges back in April.Is that all ? Matthias Goldmann, Advisor to Constellation Labs thinks so. “My feeling is that this does not play into any other ulterior motives of the Korean government,” says Goldmann. “Just because fraud happens with a new technology does not make it legal to defraud people. The same criminal laws and justice systems apply.”
Eiland Glover, CEO of Kowala agrees. “Running a large, centralized, unregulated crypto exchange with thousands of daily transactions and billions in daily trade volume of volatile assets presents its principals with many opportunities to skim off the top. You could easily front run transactions, manipulate pricing data, misreport the crypto funds in customer wallets—the list is endless. A little number times a big number is a big number. If you could skim only 2 basis points per transaction, for example, you could purloin $100m for yourself on half a trillion in annual trading volume.”
That’s why government regulation isn’t a bad thing for cryptocurrency markets. “I don’t see this as a black and white situation for further crackdown but more for a reason that authorities regulate these exchanges in an ongoing way so that fraud is minimized,” adds Goldmann. “That means the more properly and mindfully the space in general but certainly in Korea is regulated the better and healthier it is for the whole ecosystem. So, generally I don’t see that as a negative thing.”