South Korean Court Tells Nonghyup to Halt Banking Services to Coinis Crypto Exchange
A South Korean court recently ruled that commercial banks are prohibited from ceasing to offer banking services to cryptocurrency exchanges. The ruling arises out of a court case whereby commercial bank Nonghyup refused to offer deposit and withdrawal services to cryptocurrency exchange Coinis. The bank argued that it had stopped services due to concerns over money laundering and the Financial Services Commission’s recent guidelines on the same issue.
The exchange’s attorney argued that the refusal to provide services was a breach of contract. The bank and the exchange had a preexisting business agreement.
Though the court had ordered the bank to continue providing services, the bank’s actions were not without reason. There has been a wave of increased scrutiny by regulators toward cryptocurrency exchanges involved in speculative trading, money laundering, and more. The bank was among six other banks under investigation for doing business with such exchanges.
The bank had reported that it would participate in on-site inspections concerning the services that it had offered to exchanges. The investigation would verify whether the bank was complying with the “Know-Your-Client and Anti-Money Laundering” rules.
The cryptocurrency exchange at issue is not the first to have issues with Nonghyup Bank. Before the court case, another bank refused to renew a contract with another cryptocurrency exchange, citing that the exchange had been lax concerning compliance. A bank official stated,
“We have decided not to renew the contract because Bithumb still has problems in protecting consumers and information and preventing money laundering.”