Bithumb to stop issuing virtual accounts, cites non-renewal of bank contract as reason

According to investment banking industry sources, cryptocurrency exchange platform Bithumb has decided to stop issuing new virtual accounts after 1st August.

The acclaimed exchange platform, considered as one of the four biggest in South Korea, failed to renew their contract with Shinhan Bank after it got annulled. Soon after this, the exchange decided to apply for a renewal of contract with the Nonghyup Bank which subsequently got rejected.

An official from Nonghyup Bank said:

“We have decided not to renew the contract because Bithumb still has problems in protecting consumers and information and preventing money laundering.”

Nonghyup Bank has stated that their concern with regards to Bithumb’s cybersecurity and safeguarding of customers has caused them to reject the renewal. In July, hackers tried to funnel $30 million in cryptocurrencies from Bithumb’s hot wallet.

As per the new guidelines that were set this year, in January, South Korean regulators had decided to ban anonymous trading via anonymous virtual bank accounts. Following this, several Korean banks began issuing new trading accounts for cryptocurrency transactions.

The new KYC-authorized rule meant that investors could trade only if their name at the bank-circulated virtual account matched their account at the exchange platform. The move also meant that cryptocurrency exchange platforms must renew their contracts with the respective banks every 6 months.

The non-renewal has led to Bithumb being the only exchange platform amongst the biggest in South Korea to not holding a banking contract for their online account holders.

Bithumb insists that the platform formed a unanimous agreement to renew their contract with Nonghyup Bank.

A Bithumb official said:

“We are planning to iron out our different views on some legal expressions and start issuing virtual accounts soon.”

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