Upbit Warns of HIFI Price Volatility Amid 17% Token Supply Increase

Upbit, a prominent cryptocurrency exchange in South Korea, has issued an investor alert regarding Hifi Finance (HIFI) following a warning from the Digital Asset Exchange Association (DAXA). The alert comes in response to a recent governance vote that approved a significant increase in HIFI’s token supply, which could lead to substantial price fluctuations and heightened market volatility.

The governance vote, conducted from March 10 to March 17, authorized the issuance of an additional 25 million HIFI tokens. This new supply will be released over a period of 21 months, beginning in March 2025. The increase will raise the total circulating supply from 146.25 million to 171.25 million HIFI tokens. This move is part of HIFI’s transition to version 3 (v3) and an extension of a contract with the protocol’s developer, aimed at supporting the platform’s growth. However, it also raises concerns about potential market dilution and price instability.

DAXA, which oversees digital assets in South Korea, may take further regulatory actions, including restricting or halting trading support for HIFI. In light of this regulatory scrutiny and the planned supply increase, Upbit is advising investors to exercise caution due to the potential for significant price volatility. The exchange is actively monitoring the situation and will provide updates as necessary. Upbit has emphasized the risks associated with a large increase in token supply and the possibility of increased regulatory attention, urging traders to be vigilant when dealing with HIFI.

This alert underscores the importance of regulatory compliance and investor protection in the cryptocurrency market. The significant increase in HIFI’s token supply, while intended to support the platform’s development, poses risks that investors must be aware of. The potential for market dilution and price instability highlights the need for careful consideration and risk management in cryptocurrency investments. As the market continues to evolve, exchanges and regulatory bodies play a crucial role in ensuring transparency and protecting investor interests.