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Upbit Operator Faces Scrutiny Over Affiliate’s 2020 USD 103M LUNA Sale

Tim Alper
Last updated: | 3 min read
Source: AdobeStock / Koshiro


South Korean crypto exchanges are now in the firing line as the terra (LUNA) crash fallout continues to sow the seeds of chaos in the domestic crypto industry.

Dunamu, the operator of the Upbit exchange, has denied reports that it dumped large sums of LUNA to avoid forthcoming price drops as “groundless” – but questions are being asked about how and why a then-new Dunamu affiliate made a large investment in the coin, only to sell its entire stash in February 2021.

The Digital Times reported that Dunamu established a firm named Dunamu & Partners in March 2018, and purchased 20 million LUNA tokens “for investment purposes” on April 20, 2018 – paying some USD 0.12 per coin. At the time of Dunamu & Partners’ launch, Song Chi-hyung (Dunamu’s founder and chairman) and Kim Hyeong-nyeon (Dunamu’s Vice President) were registered as executive directors, the media outlet added – producing documentary proof of company records to back its claims. The duo appears to have stepped down shortly before the LUNA purchase.

On February 19 last year, records show that Dunamu & Partners sold its entire LUNA holdings – making some USD 103 million profit.

Dunamu stated:

“Chairman Song and Vice President Kim briefly served as directors immediately after the establishment of Dunamu & Partners, and were not involved in the LUNA investment. Dunamu & Partners disposed of its LUNA holdings about a year and three months ago, and the assertion that Dunamu & Partners sold all of LUNA coins to avoid the [recent] price drop is groundless.”

Regardless, despite Dunamu’s claims that Upbit and Dunamu & Partners are totally different entities, the media outlet reported that “insider trading” questions remained.

Upbit added support for LUNA via the bitcoin (BTC) market on July 26, 2019.

The size of the investment has also raised eyebrows – the media outlet claimed that Dunamu & Partners had spent two-thirds of the capital the firm was founded with on the LUNA purchase.

Meanwhile, exchanges are fighting fires over their response to the LUNA crash– and failure to act faster and in a more coordinated manner. Major exchanges faced a grilling at the hands of MPs and regulators yesterday. Some exchanges delisted LUNA in early May, but others are still yet to do so completely – a fact that has led to a massive flurry of speculative activity on trading platforms.

The Korea Herald reported that the Korbit exchange, which will not completely halt LUNA support until early June, has stated that it plans to use the transaction fees from all LUNA-related trades posted after May 10, the date when it labeled the token as one to “invest in with caution” on “customer protection projects.” Transaction fees in this period would likely be well in excess of USD 10,000.

The company was quoted as stating:

“The money will be used to support customers that faced losses due to crypto deposit mistakes and phishing scams.”

The nation’s five biggest exchanges appeared before MPs at a special hearing yesterday. Chosun quoted the Gopax CEO Lee Jun-haeng as stating that his “heart aches” when he “think[s] of the victims” – and pledged to “upgrade” his exchange’s “market alert system to the level of securities providers in the future.”

Earlier, reported that the regulatory Financial Supervisory Service has launched a probe into Terraform Labs partners, beginning with the fintech firm Chai.

Meanwhile, Terraform’s CEO and co-founder Do Kwon appears to have won a key ally in his bid to make a comeback. His plan involves relaunching the blockchain and debuting a new native token (also to be called luna – with the “old” coin to be renamed terra classic).

The crypto exchange HitBTC has announced that it will start enabling trades in the new coin as of May 27, and linked to Kwon’s revival plan, which proposes creating “a new Terra chain without [an] algorithmic stablecoin.”


Learn more: 
South Korean Regulators to Inspect Companies Linked to Terraform
More Crypto Regulation Incoming in South Korea Following Terra Collapse, Gov’t Indicates

South Korean Government, Prosecution Turn up the Heat on Do Kwon and Terraform
South Korean LUNA Buying Skyrockets, Token Trading at Huge Premium on Domestic Exchanges

Terra ‘Revival Plan 2’ Set to Pass, But There is Still Confusion within Community
LUNA Jumps as 273M Tokens Burned Despite Do Kwon Opposing the Idea