Bithumb stopped the process of issuing virtual accounts to crypto sellers starting with the first day of August after defeating to extend the contract with its bank.
Korean company Bithumb has frozen new virtual account dissemination starting on 1 August. The company is currently the largest Korean cryptocurrency trading platform by 24-hour trading volume- $176,841,469, according to CoinMarketCap.
Business Korea cited:
“Bithumb, one of South Korea’s four biggest cryptocurrency exchanges, will stop issuing new virtual accounts from August as it has failed to renew a contract with NH Nonghyup Bank.”
The media went on stating that “customers who already have virtual accounts can use them for deposit and withdrawal services.”
Etoday reported that Bithumb has a month grace period to extend its contract with the bank, during what clients will be able to deposit and withdraw funds from existing accounts. Still, “it will become difficult to use existing virtual accounts if the contract renewal is finally terminated.”
4 Korean crypto exchange can issue real-name virtual accounts
“Real-name virtual accounts” are a general condition imposed by the Korean government in January 2018 as a preventive measure against money laundering and the low level of data transparency between cryptocurrency exchanges and their users.
Only four crypto trading platforms based in Korea received approval for issuing real-name virtual accounts, counting Upbit, Bithumb, Coinone, and Korbit. In order to be granted this opportunity, they have ensured that comply with Anti-Money Laundering and Know-Your-Customer Standards.
Back in May, Bithumb announced it will introduce a withdrawal limit for merchants who do not own a real-name virtual account. “We have decided to gradually reduce the withdrawal amounts in the Korean won because it is raising concerns that bank accounts for unconverted withdrawals may become a target of various financial crimes,” a Bithumb representative claimed at that time.
The cryptocurrency exchanges were forced
As indicated by Business Korea, back in January “the government forced cryptocurrency exchanges to renew the service contract with banks every six months in a bid to encourage them to make continuous efforts to prevent money laundering.”
The first phase was completed in July and only Upbit, Coinone, and Korbit succeeded in prolonging contracts with their banks. As for Bithumb’s request, it was rejected by the NH Nonghyup Bank.
“We have decided not to renew the contract because Bithumb still has problems in protecting consumers and information and preventing money laundering,” explained a bank representative, adding that: “The bank thinks that Bithumb’s data processing systems have flaws in light of the recent hacking incident, which caused the exchange a loss of 18.9 billion won (US$16.88 million).”