South Korea’s Largest Exchange, UpBit Rewards $930 For Ponzi Schemes or Scams Report

$930 UpBit Reward for Scams

UpBit, the largest South Korean cryptocurrency exchange platform, recently launched a new reward system. This is a counter measure to battle the rising number of illegal scams and Ponzi schemes. Through a partnership with Bittrex, the platform lists over 120 coins and has a 24-hour trading volume of $1.1B.

$930 Reward for Vigilant Users

The aim is to create a “friendly cryptocurrency trade environment and to protect the exchange platform from fraud“. Consequently, they invite all its users to report any suspicious activities to UpBit and police agencies. The pilot phase of the system will run up to March 2019. Thereafter UpBit will decide if the program will continue running.

The UpBit Reward system encourages vigilance according to a report from Hankook Media.

“If illegal multi-level fraud eyewitnesses or victims report to UpBit and investigating agencies at the same time, a cash award will be given to the first reporter of the illegal recruitment case.”

UpBit is indeed offering a $930 reward to the first complainant. To report suspected criminal activities, UpBit advises one to select the Kakao Talk Consultation option on the UpBit app.

By March 23, UpBit had reported over 20 fraud related cases to the police after carrying out their own investigations. They even got a letter of appreciation from Suwon Chungbu Police Station after reporting an impersonator. Hankook Media confirms this reporting that,

“UpBit has been tracking illegal multi-level coin schemes with its own monitoring.”

Kakao Coin Frauds

There have also been increasing reports of fraudulent acts pretending to be Kakao Coin and issuing pre-sales of its coins.

Kakao came out to emphasize that the undergoing pre-sale of coins and recruitment of participants and investors for the platform are not true.

It further went ahead to issue a notice stating, “We are concerned about the damage caused by the fraudulent activity of the distributor”, clarifying that, “the company is preparing to establish a blockchain subsidiary.”

Regulatory Worries

This comes as the controversial UpBit receives criticism for not participating in the Korean Blockchain Association, meaning that it has no obligation to comply with the self-regulatory measures taken by other exchanges such as BitHumb and Korbit.

The exchange has not confirmed if it will be joining the association or not stating. Reporting to Newspim, they “are currently reviewing the self-regulation and there is no decision about joining the association”.

There are major concerns that if UpBit does not join the association there will be issues with equality among exchanges. Also other exchanges may withdraw from the association making self regulation pointless. UpBit has however is taking measures to comply with the mandates set by the government.

Despite all the challenges, UpBit has continued experiencing exponential growth with approximately 1M daily users.  UpBit takes over the top spot replacing BitHumb that currently has a trading volume of 686 million and only lists 12 currencies.

The rival exchange, BitHumb began distribution of brochures and opened walk-in customer centers to aid in combating cryptocurrency fraud on Tuesday. The brochures use comics and an easy-to-understand text to make concepts such as hacking, preventative measures and damage control, easy and quick to grasp.

Is Vitalik’s Gloom Projection of ICOs Becoming a Reality?

90% of all ICOs will Fail

Crowd Funding researchers estimate that as much as $4B were raised in 2017 through initial coin Offerings or ICOs. That is double the amount venture capital funds as LightSpeed Venture Partners and Benchmark came up with during the same period.

From a neutral point of view, ICOs did leverage on the power of the people. It’s pure psychology at its best. Encouraging common people to invest in ventures they know nothing about because most don’t want to miss out. In the crypto-sphere, most refer it to a fear of missing out (FOMO). Hype and many scientists have proof that the late December 2017 cryptocurrency rally was mostly out of hype. Exacerbating this is the sad fact that there is no regulation and many con artists are taking full advantage of this.

Vitalik Believe Most ICO will Crash

But here’s the caveat. Vitalik, the Ethereum founder has a gloom projection of ICOs in general. This is ironical because most coin offerings are done on his platform. He says that up-to 90% of all coin offerings won’t make it past the development stage and couple with weak or non-existent laws, it shall be worse.

“It is an established fact that ninety percent of startups fail. And it should also be an established fact that 90 percent of these ERC20s on CoinMarketCap are going to go to zero.”

Unfortunately, it’s the investors who bear the brunt. Already, research finding shows that more than 10% of all the ICO funds are gone. Going down with them are grand projects behind theoretical market analysis and flashy websites in the wake of increasing government regulations.

The Chinese were the first to crack the whip on ICOs.  Inevitably, this set the balling rolling for other jurisdictions that were waiting for a simple nudge and to call action. China’s basis became a replicable blueprint for countries as South Korea who had similar concerns.

At core were the deafening calls for consumer protection through favorable laws and government intervention.

Regulatory Steps

Of course, many didn’t expect such. However, with more than 50% failure rate, investors are playing hard ball. Regulatory bodies are doing their part and so are influential companies as Google, Facebook and Twitter. All of them are following the same course, purging all cryptocurrency advertisements especially ICOs.

It’s helpful and while investor caution is at an all time high, it’s the blockchain ventures promising security tokens that should up their game. In 2018, more ICOs are failing to meet their soft caps as investors insist that start-ups link their real assets with tokens.

Besides, investors know that the only offer ICO companies offer them is “possibilities” of future token appreciation and are now demanding more. Like IPOs, many are now angling for interest earnings on their tokens on top of possible dividend compensation in case the company over perform.

What ICOs Are Doing

To counter this, it’s becoming increasingly common to find companies like Quintric backing their tokens with precious metals as Gold. Many more are self regulating through SAFT agreements. This encourages stability, responsibility and a win-win scenario mainly for investors who want to see value, not scam.

By the same vein, ICOs correlates positively with millenials. Studies show that young people trust peer to peer reviews and likely to invest in social media active start-ups.