Riding on investment fever, listed on the chopping block without verification
Predicting outcomes in various fields such as elections and sports
Coin ‘Drift’ operates betting service on homepage
Upbit listed in early November and did not mention ‘gambling’
There is a description of the betting system in the coin’s white paper.
The listing information only specifies loan and compensation services.
Self-regulation as a best practice is useless
Upbit side “decided that there was no violation of the law”
Upbit, Korea’s largest virtual asset exchange, has recently listed virtual assets used for online betting, sparking controversy. Upbit did not specify such speculative behavior in the related information when listing the coin. As investment enthusiasm in the virtual asset market heats up in the aftermath of Donald Trump’s election as president in the U.S. presidential election, it is pointed out that exchanges are rushing to list coins without proper verification.
Upbit, Gangnam-gu, Seoul. Yonhap News
According to Upbit on the 26th, the ‘DRIFT’ coin was listed on the Upbit Korean Won Exchange on the 8th. This coin was issued last May in the Cayman Islands, a common tax haven, and appears to be operating an online betting service on its website.
Online betting operated by Drift covers a variety of fields, including sports, elections, and virtual assets. If you predict the outcome and bet a stable coin (a virtual asset whose value is linked to the dollar) or a virtual asset, you win or lose the bet amount depending on the result. It is pointed out that in fact, it is no different from online private gambling.
During the U.S. presidential election, bets were placed on the outcome of presidential candidate Donald Trump versus presidential candidate Kamala Harris. The amount placed on this bet alone amounted to $23.66 million (33 billion won). Last September, betting was held on whether the U.S. Federal Reserve would cut interest rates by 0.5 percentage points, and bets ranged from betting on the winner of Formula One (F1), an American racing game, to betting on the winner of a boxing match. Until now, bets similar to gambling sites were being made on the coin.
![[단독] Hiding the ‘meandering nature’… Upbit, controversy over listing of betting coins](https://img.segye.com/content/image/2024/11/26/20241126515865.png "[단독] Hiding the ‘meandering nature’… Upbit, controversy over listing of betting coins")
Online betting screen provided by the virtual asset Drift website. Bets were placed on the outcome of the election of US presidential candidates Donald Trump and Kamala Harris. Homepage capture
Upbit, where coins are traded, does not provide any warning or guidance regarding such speculative practices. The coin information provided within Upbit only states that Drift Coin provides trade, lending/rental, and compensation (reward) services, but does not mention betting. An explanation of Drift’s betting system was also included in the white paper, which is a virtual asset manual, but the exchange did not inform investors of this. According to CoinMarketCap, as of 3 p.m. on this day, 20% of Drift’s total trading volume came from domestic Upbit.
The Digital Asset Exchange Joint Consultative Body (Daxa), a group of five won-denominated virtual asset exchanges, has been working on self-regulation of coin listings by creating ‘Best Practices for Virtual Asset Transaction Support’ since last July, but some are pointing out that it has not been able to do its job. Best practices stipulate that virtual assets are designed to be used for illegal activities such as terrorist financing or circumvention of regulations, or are primarily used or likely to be used for such purposes, as disqualification requirements for transaction support. Each exchange must also provide the main contents of the white paper in Korean on its website.
An Upbit official said, “Before supporting transactions, we completed a legal review on whether Drift transaction support violates current laws and decided that there were no violations.” He added, “The proportion of BET (online betting) services in the entire virtual asset Drift business is “It’s very little,” he said.
Due to the recent surge in virtual asset prices, criticism has also been raised that exchanges are not conducting proper verification in the process of increasing the number of listed coins. The number of coins listed on Upbit from January to March of this year, when virtual asset volatility was low, was only 5, but in October to November, when Bitcoin soared, 10 coins were listed. This includes many memecoins that are highly speculative due to their high price volatility, such as Cat in a Dog’s World (MEW), PEPE, and BONK.
Hong Ki-hoon, professor of economics at Hongik University, said, “As there is no legal basis for regulation of listing on exchanges, ethically problematic coins are being listed one after another.” He added, “A second-stage bill that deals with the listing, distribution, and disclosure of coins must be prepared as soon as possible.” “We do it,” he emphasized.
Reporter Ahn Seung-jin [email protected]
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**Should cryptocurrency platforms like DRIFT be held to the same regulatory standards as traditional gambling platforms, considering the potential for financial harm and addiction?**
Here are some open-ended questions to encourage discussion and diverse viewpoints based on the provided article:
**I. The Nature of DRIFT Coin and Online Betting**
* The article describes DRIFT as operating an “online betting service.” Do you agree with this characterization? Why or why not? Where do you draw the line between betting and other forms of speculation in the cryptocurrency market?
* Does the fact that bets can be placed on diverse events, from elections to sports matches, change your perspective on the nature of DRIFT’s service?
* What are the potential risks and benefits associated with using cryptocurrency for online betting? Who ultimately bears the responsibility if someone suffers financial losses through such platforms?
**II. The Role of Upbit and Self-Regulation in the Cryptocurrency Industry**
* Should cryptocurrency exchanges like Upbit be held accountable for the types of coins they list, even if those coins are technically legal? What role should due diligence play in the listing process?
* Do you think Upbit’s argument that DRIFT’s betting service represents only a small proportion of its business is a sufficient justification for listing the coin? Why or why not?
* The article mentions self-regulatory efforts by exchanges. Are these efforts sufficient to safeguard investors and prevent the listing of potentially harmful coins? What alternative or complementary regulatory mechanisms might be needed?
**III. The Broader Context of Cryptocurrency Regulation and Investment**
* The article notes a surge in cryptocurrency prices and a corresponding increase in the number of listed coins. Is this trend indicative of a healthy market, or does it raise concerns about excessive speculation and risk?
* Given the rapid evolution of the cryptocurrency market, how can regulators strike a balance between fostering innovation and protecting consumers?
* What are your thoughts on the potential benefits and drawbacks of establishing stricter legal frameworks for cryptocurrency exchanges and coin listings?
**IV. Ethical Considerations and Responsible Investment**
* Do you believe that exchanges have an ethical obligation to warn investors about the speculative nature of certain coins like DRIFT? How can exchanges effectively communicate these risks without discouraging innovation?
* What responsibility do individual investors bear for conducting their own due diligence before investing in cryptocurrencies?
* In light of the potential for misuse of cryptocurrencies for gambling and other risky activities, do you think there are certain types of coins or tokens that should be prohibited from listing altogether?
These questions aim to stimulate a nuanced and informed discussion about the complex issues surrounding cryptocurrency listings, self-regulation, and the broader implications for investors and the market as a whole.
