Bithumb, one of South Korean leading cryptocurrency exchange platforms, was forced to suspend the issuance of new virtual accounts after NH Nonghyup Bank rejected its contract renewal application. The financial institution alleged that the crypto trading platform still has security flaws, as reported by BusinessKorea.
According to the report, Bithumb said that no new real name virtual accounts would be opened as of yesterday, August 1st, but clarified that this measure is temporary and will not affect customers who already have virtual accounts.
The platform has been left without a banking agreement as it did not renew its contract with Shinhan Bank once it expired.
It should be recalled that in late January of this year, the South Korean authorities established regulatory measures that require all those individuals involved in cryptocurrency operations to be correctly identified and linked to real name bank accounts. The regulations included a requirement that cryptocurrency exchange platforms must renew their banking contracts every six months. Such measures aim to prevent money laundering and the risk of fraud using cryptos.
NH Nonghyup Bank rejected Bithumb cryptocurrency exchange platform because of security flaws
According to BusinessKorea, a spokesman for NH Nonghyup Bank explained that they decided not to renew the contract because “Bithumb still has problems protecting consumers and information and preventing money laundering.”
A representative of Bithumb cryptocurrency exchange platform told the local media that they are reaching a consensus with NH Nonghyup Bank, and plan to resolve the different points of view, before reissuing new virtual accounts, which, in his opinion, will happen soon.
However, if such an agreement is not reached, Bithumb would have to resort to collection methods that would generate multiple inconveniences for its users.
The press release also reports that Bithumb is the only cryptocurrency exchange platform of the four major ones based in South Korean that has not yet renewed its contract with commercial banks. In this sense, Nonghyup Bank renewed the contract with Coinone and Bank of Korea renewed the contract for the Upbit platform. For its part, the startup Korbit signed a contract with Shinhan Bank.
