Crypto Exchange Bithumb Disables New Accounts Due to Bank Freeze
One of the most important cryptocurrency exchanges in the world and in South Korea, Bithumb, has suspended the issuance of new accounts due to a problem with a bank in the country.
Today, August the 1st, is a complicated day for Bithumb. New customers will no longer be able to create accounts in the platform because there are no banking partners ready to work with the exchange. The information has been released by Business Korea, which informs that those users that already have virtual accounts can use them as usual.
The problem lies in the fact that Bithumb did not renew the contract it had with Shinhan Bank once it terminated. Bithumb wanted to search a new partnership with the NH Nonghyup Bank, but the financial institution did not accept the request.
An official that works at Nonghyup Bank commented on the matter:
“We have decided not to renew the contract because Bithumb still has problems in protecting consumers and information and preventing money laundering.”
South Korea has been working very hard with its regulatory agencies to create a very regulated crypto environment. In the last months, and during the last year, several hacks and scams took place because exchanges did not take the necessary measures to protect its users. Additionally, non-regulated exchanges, without strong Know Your Customer (KYC) policies are not able to operate in South Korea.
The bank is worried about the data processing systems that the exchange has. They say that Bithumb has flaws, and this is something that caused the recent hack that caused a loss of $16.88 million dollars.
But Bithumb knows the situation and is trying to be compliant as soon as possible.
“We have a consensus with Nonghyup Bank on renewal of the contract,” explained a Bithumb official. “We are planning to iron out different views on some legal expressions and start issuing virtual accounts soon.”
Bithumb is part of the ‘big four’ exchanges in South Korea, and has been the only one in that list that couldn’t renew the contract with commercial banks. The other exchanges Coinone, Upbit and Korbit were able to renew their work with Nonghyup Bank, the Industrial Bank of Korea and Shinhan Bank, respectively.
A similar situation happened in Chile when some banks decided to block the accounts of the most important exchange in the country: Buda.com. In the end, the government was able to solve the situation and the banks started to offer services again.
Back in June, Bithumb was hacked and $30 million dollars have been stolen in virtual currencies. After it some funds were recovered, but the loss have been important for the exchange. The country’s regulatory agencies followed the case very closely, and now it seems that banks are taking more cautious decisions.