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South Korea: Litecoin privacy upgrade worries Upbit exchange

Upbit, one of the largest digital currency exchanges by transaction volume in South Korea, has issued an investment warning about Litecoin (LTC) to its users. The exchange has been put on edge by the recent Litecoin blockchain upgrade that introduces confidential transactions.

In the notice, Upbit stated that usage of the new feature on the exchange would violate South Korea’s Reporting and Use of Specific Financial Transaction Information Act. The law requires digital currency exchanges to put KYC and AML systems in place.

For its next steps following the designation of all LTC trading pairs as risky items, Upbit says it will conduct a thorough review of its concerns. If found to be valid, it will release a delisting schedule for the token. At present, it has suspended new deposits of LTC.

“If the reason for designation of a significant item is not fully explained during the review period, Upbit will notify the end of the transaction support through a separate notice, and the exact transaction support end schedule will be announced through the transaction support end notice, ” the notice said.

Bithumb, another major South Korean digital currency exchange, also put out a similar notice about the asset. Bithumb highlighted that the Litecoin MimbleWimble Extension Blocks (MWEB) upgrade, which went live last month, had activated its virtual assets investment warning item designation policy.

What about the Litecoin upgrade is creating the fuss?

The MWEB upgrade has been one of the most anticipated Litecoin upgrades so far. It was first proposed in 2020. The MimbleWimble technology allows users to send tokens while concealing transaction data.

This makes tracking a sent sum impossible and nontaxable by authorities in countries like South Korea. Other digital currencies like Monero that have similar features are largely banned or regulated by many jurisdictions.

Meanwhile, the Filecoin upgrade also enhances scalability. According to the Litecoin team, it is a better privacy and scalability alternative to other similar technologies such as Confidential Transactions and ZK starks.

This has not been the only recent controversy Litecoin has been embroiled in of late. Last year, the network suffered some reputational damage after it appeared that its supporters floated rumors that Walmart was going to accept its native token, LTC.

At the time, CNBC reported that Walmart denied the rumors, sending the price of the asset tumbling.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—a from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple and
Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.

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