A digital board shows prices of cryptocurrencies listed on Upbit, the country’s largest digital asset exchange by trading volume, on June 3. (Yonhap)

Upbit, South Korea’s leading cryptocurrency exchange, said on June 21 it would take legal action against PicaProject, which accused the exchange of misusing its coins to take profits.

PicaProject’s coin Pica was among 24 digital tokens that Upbit removed from its platform on June 18. In response, PicaProject accused the exchange of misusing the funds to the tune of 5 million Pica coins intended for marketing events when it went public in January this year.

According to PicaProject, Upbit only utilized a small percentage of the Pica coins for their intended purpose and pocketed the rest, claiming they were charged exorbitant listing fees.

On June 21, Upbit denied such allegations and said that it would hold Pica responsible for speculation and false statement.

The exchange also added that the Pica’s delisting was based on critical issues including disparity between the number of Pica coins that the operator said it would circulate and the increased number of the coin that were circulated.

Upbit said that Pica circulated 250 million Pica coins, significantly more than its planned circulation volume of 124 million Pica coins at the point of the ICO. It also claimed that PicaProject did not respond to Upbit’s demand for an explanation in April.

On June 11, Upbit announced it was discontinuing trading services of five digital tokens while issuing warnings on 25, allowing a grace period of one week for explanation and improvement. On June 18, the cryptocurrency exchange said it decided to halt the trading services for 24 out of the 25 aforementioned digital coins.

Following the announcement, the Pica operator said on its blog that “It is regrettable that we were delisted, even though we made our best efforts to explain our situation to lift the warning.”

The explanations that Pica gave to Upbit included the company’s latest six-month roadmap with highlights on its achievements, business performance and its response to the domestic and overseas regulatory environment, the Pica operator said.

“We will take all possible measures to protect investors against the sudden investment warning label and the subsequent trading halt that we were not forewarned about,” it said in a statement.

Upbit’s decision to delist 29 coins came parallel to the Sept. 24 deadline for local digital asset exchanges to register with the financial authorities. They are also required to comply with measures such as using real name accounts issued in partnership with local banks and an information security management service.

Local banks are currently conducting due diligence on deciding whether to renew partnerships with the four largest cryptocurrency exchanges, according to local media reports. The number of altcoins, referring to all cryptocurrencies other than Bitcoin, is one of the evaluation items that banks will take into consideration when evaluating cryptocurrency exchanges, a guideline drafted by the Korea Federation of Banks showed.

By Park Ga-young (gypark@heraldcorp.com)