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Photo courtesy of Bithumb |
[Alpha Biz= Kim Jisun] South Korea’s Fair Trade Commission (FTC) has launched an on-site investigation into cryptocurrency exchange Bithumb on suspicion of violating the Act on Fair Labeling and Advertising.
According to industry sources, the FTC dispatched two investigators to Bithumb’s headquarters in Seoul’s Gangnam district on Tuesday morning to conduct an on-site probe.
The investigation is focused on statements Bithumb made in press releases in March and April last year, in which the company claimed to be the “No.1 cryptocurrency exchange in Korea in terms of liquidity.” The FTC is reportedly examining whether the claim lacked objective evidence and amounted to exaggerated or misleading advertising.
Under South Korea’s advertising law, businesses are prohibited from making false or exaggerated claims about products or services that may deceive consumers or cause misunderstanding.
Data from cryptocurrency market data platform CoinGecko show that, based on Korean won-denominated trading volume last year, Upbit accounted for 68% of the market, followed by Bithumb at 28% and Coinone at 2%.
The FTC is also reportedly considering whether to expand the investigation to include allegations of unfair customer inducement. Late last year, Bithumb ran a promotion offering 100,000 won in incentives to new users who connected to its platform via an API-based system. However, after approximately 50,000 users participated, the exchange changed the payout conditions, resulting in an estimated 30,000 participants failing to receive the promised incentives.
Regulators are reviewing whether the change in conditions violated fair trade rules governing consumer promotions, according to industry sources.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
