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The South Korean Financial Services Commission (SFC) chairman, Kim Byung-hwan, has announced an investigation into UpBit’s dominance in the country’s virtual assets market sector. 
Kim described the monopolistic structure as worthy of regulators’ attention while speaking at the State Audit of the National Assembly Political Affairs Committee. 
Kim’s comments were in response to questions by Democratic Party representative Lee Kang-il, who noted that Upbit is the largest crypto exchange in South Korea and second globally. A recent audit shows that Upbit accounts for more than half of the South Korean market, with over $1.18 billion in trading volume over the last 24 hours. 
He said: 
<blockquote>
 “The phenomenon of excessive concentration on one company, Upbit’s monopoly system began after the business alliance with K-Bank.”
</blockquote> 
With Lee emphasizing the potential risks of Upbit dominance, Kim has promised that the Virtual Assets Committee will investigate the issue. Interestingly, Upbit recently announced steps to limit insider trading in compliance with the Virtual Asset User Protection. 
<h3 id="span-style-font-weight-400-lawmakers-question-the-relationship-between-upbit-and-k-bank-span">Lawmakers question the relationship between Upbit and K-Bank</h3> 
Part of the reason for questioning Upbit’s dominance is the relationship between the exchange and K-Bank. Lee noted that Upbit deposits account for 4 trillion won, around 20% of all K-Bank deposits, putting K-Bank at risk of a bank run if all Upbit customers decide to withdraw their funds. 
K-Bank is a neo-bank based in South Korea that plans to have an initial public offering (IPO) by October 30. The digital bank plans to raise 984 billion won ($731.64 million) from investors, making its IPO one of the biggest expected this year. 
However, Rep. Lee is concerned about its relationship with Upbit, including that it offers 2.1% interest on Upbit customers’ deposits, far above the bank profit margins below 1%. He also noted that the relationship violates the principle of separation between the finance and industry sectors. 
<h3 id="span-style-font-weight-400-irregularities-are-common-in-the-south-korean-crypto-market-span">Irregularities are common in the South Korean crypto market&nbsp;</h3> 
This is not the first time there have been concerns about Upbit. Crypto investor <a href="https://x.com/AltbriMarius/status/1712531359506252224" rel="nofollow" target="_blank">Marius Capital</a> described the platform as a wild west where anything goes, with a specialty in pumping altcoins, wash trading, and trading without rules. 
He said: 
<blockquote>
 “Upbit Korea is not an exchange lol. it’s a place of choice for HFT trading, market making, wash trading and counter trading. Zero rules and no SEC.”
</blockquote> 
CryptoQuant CEO <a href="https://x.com/ki_young_ju/status/1473567036425248772" rel="nofollow" target="_blank">Ki Young Ju</a> also confirmed the prevalence of the pump-and-dump scheme on the exchange but attributed it to the strict capital controls in the country that isolate the Korean exchanges from the global ecosystem. This phenomenon has allowed traders to use the Kimchi premium, the price difference between cryptocurrencies on South Korean exchanges and global exchanges. 
<blockquote>
 “It happens because South Korea has very strict capital controls, blocking arbitrage opportunities between global exchanges. Korean gov’t is going to make this problem even worse with the travel rule solution, which makes Korean exchanges even more isolated.”
</blockquote> 
Meanwhile, the renewed interest in Upbit could lead to further investigations into South Korea’s crypto sector. Experts are concerned that the investigation could affect the crypto market and cause a further decline in the value of cryptocurrencies. Bitcoin and Ethereum are already down 2% today, and there are fears that they could fall further. 
Technical analyst <a href="https://x.com/ali_charts/status/1844285488607395859" rel="nofollow" target="_blank">Ali Martinez</a> noted that ETH, currently trading at $2,390, now has a key support level of $2,250, and dropping below that could kickstart a massive price drop. He points to historical data showing that Ethereum sees an average of 53% price correction anytime it breaks below the TD setup support line. 
Even Bitcoin is at risk of going below $60,000 as whales appear to be selling off assets. Over the last 72 hours, <a href="https://x.com/ali_charts/status/1844317931523670336" rel="nofollow" target="_blank">whales</a> have sold or redistributed about 30,000 BTC worth $1.83 billion.

South Korea to investigate Upbit as concerns over monopoly and market risks grow

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