South Korea’s most prominent exchange, Upbit, is facing an embarrassing situation with a fraudulent deposit: someone deposited a fake coin into Upbit, which Upbit recognized as an APT.
– Someone created a fake coin and deposited it on Upbit.
– Upbit recognized the fake coin as an APT.
– The bot had already deposited a huge amount of coins into unspecified accounts. These fake coins were deposited into a large number of unspecified accounts on Upbit.
– For those who received the deposits and sold them, Upbit started calling them to ask for their money back.
– It can be estimated that around 100,000 accounts were affected. These were accounts with Aptos deposits on Upbit. (According to community sources, the scammer only sent a small amount (250,000 KRW) to avoid the travel rule. The total amount of fake coins deposited on Upbit is estimated to be 20 million KRW.)
“Data shows that the fake APT token address sent about 30-50 fake APTs to about 380k addresses. Assuming they are all Upbit deposit users, the total amount is about $95 million. Upbit’s transactions today were 14.91 million APT, while yesterday’s transactions were only 260k APT.”
How did Upbit respond?
Upbit posted an announcement shortly before 4pm ET.
“Due to the maintenance of the Aptos (APT) wallet system, we are suspending the Aptos (APT) deposit and withdrawal service. We will resume deposits and withdrawals once the maintenance is complete, and we will update the service resumption through this notice.”
The exchange is conducting landline phone calls to confirm the number of victims and to request refunds. According to the community, the exchange is calling affected users and telling them, “This is not your property and you are entitled to have it returned. If you refuse, we may take legal action, and we will compensate the difference in the amount according to the coin market price with gift icons. It is absolutely impossible to send a recorded notice via Kakao Talk or other messengers. We ask you to trust Upbit and follow the APT refund process.”
What happens next?
There will be a manhunt for the culprits, and it shouldn’t be hard to find them in South Korea’s KYC-heavy cryptocurrency trading market. The culprits will likely face criminal charges for things like obstruction of business.
This is a problem because many users will not be able to reach Upbit by phone. How will Upbit deal with these users? If they avoid calls or don’t agree to redeem, they could be sued for theft by taking possession, or the exchange could penalize them for using the exchange.
Unlike South Korea’s second-largest exchange, Bithumb, Upbit has maintained its reputation by not listing small altcoins.
But the obvious fact is that fake coins were being bought and sold on Upbit. How could a major, self-proclaimed trusted exchange allow fake money to be recognized as real money? Some see this as tantamount to an exchange hack – were these traded as book trades? Or was it moved from an internal Upbit balance? The facts need to be confirmed, and even if they are reversed, it will be a letter. Many of the people who received APT may have sold their coins. What happened to the price of the APT on the exchanges? We’ll need to confirm this as well. And are there any other incidents of fake coin trading that we haven’t heard about?
The article has updated.