Sui Network – a layer 1 blockchain – has gained significant traction since its mainnet launch in May. However, South Korean regulators believe the developers lied about several aspects of the token. According to the latest report by a local news agency, the director of the Financial Supervisory Service (FSC) said that an investigation will be conducted to determine whether SUI is operating as a fraudulent scheme.
While the main bone of contention is SUI’s freefalling price since the token lost over 91% of its value, the Sui Foundation, on the other hand, has denied the accusations.
South Korean Authorities’ Accusations
During the Government Affairs Committee audit, the South Korean regulator claimed that this drop could be attributed to their “false” claims regarding the circulating supply, which the team behind SUI has allegedly failed to address.
Democratic Party lawmaker Min Byung-deok’s statement regarding the matter read,
“The price of Sui Coin has plummeted, and the main reason is that they lied about the amount in circulation, but they are not raising the issue. It has fallen more than 67% in the five months since listing. The issuer, Sui Foundation, received self-interest by staking (depositing) the locked-up amount and sold it to increase circulation.”
The regulator further blamed the issuer, the Sui Foundation, and accused it of prioritizing personal gain by unblocking a portion of the supply and selling it to inflate the circulating amount.”
Furthermore, Digital Asset Exchange Alliance (DAXA), a consortium comprising major cryptocurrency exchanges in South Korea, faced criticism for purportedly neglecting to verify SUI’s circulating supply. The representative argued that no actions were taken against SUI, even though it clearly violated the guidelines established by the alliance responsible for overseeing the cryptocurrency industry in the country.
In response, FSC Director Lee Bok-hyun urged DAXA to implement sufficient measures to rebuild consumer trust. He emphasized that if any manipulation of distribution volume occurs through staking or unfair disclosure, they will initiate consultations and enforce the appropriate actions.
Director Lee also highlighted the presence of institutional limitations, noting that the recently enacted Virtual Asset User Protection Act lacks essential provisions for supervising primary markets and exchanges. He stressed the necessity for further discussion in the subsequent legislative phase.
SUI Foundation Responds
The foundation behind the development of the SUI ecosystem said that the statements made by the authorities were “unfounded and materially inaccurate.”
In a message posted on X (formerly Twitter), the SUI Foundation affirmed that it has not engaged in any liquidation of SUI tokens, including those received as staking rewards. They emphasized that all SUI token transfers are visible and verifiable on the blockchain while underscoring their “consistent and transparent” communication with the community regarding the SUI token’s circulating supply schedule.
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