CryptoWatch: Why a raid in a South Korean crypto-exchange rattled the wider bitcoin market

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Reports of a police raid on one of the largest cryptocurrency exchanges in one of the most cryptocrazy countries has rippled through the digital-currency market over the past 24 hours.

The exchange known as UPbit, South Korea’s largest crypto platform, has been accused of selling cryptocurrency it doesn’t hold, according to local news outlet Chosun. “We have secured hard disks and accounting books through confiscation. Analysis is expected to take days,” local authorities said, according to a translated version of the Chosun report.

UPbit also confirmed the news on its website.

The report helped to send bitcoin prices BTCUSD, -5.60% tumbling to a three-week low of $8,511.70, early Friday, losing as much as 6.5%. A single bitcoin last changed hands at $8,582.98, down 5.6%.

Along with Japan, South Korea is one of the biggest markets for cryptocurrencies, boasting 8.9% of all bitcoin trading, according to a report from Coinhills, a digital-currency data website. UPbit has a 24-hour volume of more than $2 billion, according to CoinMarketCap.

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In a statement, the crypto exchange said: “UPbit is currently under investigation by the prosecution, and we are working diligently. UPbit services such as all transactions and withdrawals are operating normally.”

The exchange platform said customer assets were being kept secure, according to a translated version of UPbit’s statement.

Coins considered as alternatives to bitcoin, or altcoins, have endured the brunt of the recent downtrend, with Ripple’s XRP XRPUSD, -10.61%  off 9.5% at 70 cents and Bitcoin Cash BCHUSD, -9.67%  down 8% at $1,425.00.