Crypto Exchange UpBit Halts Aptos Withdrawals Due to a Scam Token Bug
UpBit to Halt Deposits and Withdrawals
UpBit is the biggest cryptocurrency exchange in South Korea. The firm has now halted deposits and withdrawals of Aptos tokens. The suspension took place on account of an error that resulted in a scam token acting as the legitimate Aptos coin as per local media reports.
UpBit told the media that the exchange detected unwarranted deposit attempts and ran a security check on the situation. The issue was first reported by a user on X who goes by the name Definalist.
The exchange platform halted all deposits and withdrawals while the error was being fixed. The scam token has been traced back to a website called ClaimAPTGift.com. The scam tokens originating from this website were airdropped to 400000 Aptos wallets.
The distribution of scam tokens is visible in the blockchain data reports. A screenshot of the fraudulent token indicates that UpBit was treating the scam token as the legitimate local APT token.
This issue led to increase in the value of APT token by 35% which crashed back 3 hours later. Aptos became the trading pair with highest volume on the trading platform as per CoinGecko.
South Korean regulators are cracking down on cryptocurrency exchanges in the region. As per local media reports, regulators are increasing legislative compliance for major native exchanges namely Bithumb and UpBit.
Legislators have directed South Korean authorities to bring stricter rules towards majority shareholders of native virtual currency exchanges. Regulators are working on bringing the same regulatory guidelines for crypto sector that are implemented in the banking sector.
The Financial Intelligence Unit (FIU) of the Financial Services Commission has put together a task force to amend virtual currency firms. The task force is working on reforming the eligibility criteria for cryptocurrency exchanges.
The amendments will be added to the reporting circular for virtual currency exchanges and implemented until October 2024. At the same time, the new regulatory changes are going to become the standardized reporting criteria for virtual currency exchanges in the country.
Specific Financial Information Act has issued a new directive for all digital currency institutions to file for a renewal report after 3 years once the first report has been accepted.
South Korean Crypto Exchanges to Comply with New Reporting Requirements
The cryptocurrency exchanges in the region are now working on complying with the new reporting requirements set to go into effect in October 2024. UpBit exchange started the inaugural process in 2021 which was accepted in October.
Among other duties, the task force is working on qualification criteria for the majority shareholders of named digital currency exchanges. In accordance with these reforms, government officials will work on determining whether a given stakeholder completes the eligibility criteria to be able to operate and manage a financial enterprise.
This initiative will discourage illicit activities from major shareholders who have significant influence in the digital currency business and ensure safety for the consumers. Prior to the current situation, shareholders had been operating in a grey area on account of lack of specified regulations.
However, under the Special Financial Services Act, virtual currency exchanges will mandate exchange representatives and registered executives to participate in the reporting and review process. At the same time, the new regulations will allow domestic exchanges to reduce fraudulent and market manipulation techniques.
