By Jhoo Dong-chan
The nation's largest crypto exchange Bithumb is likely to lose its leading status as it has ceased creating real-name virtual accounts due to its failure to renew a contract with NongHyup Bank.
The lender recently decided to suspend the accounts contract with Bithumb amid mounting concerns about its poor security systems as the exchange lost an estimated 35 billion won ($31.5 million) worth of virtual coins to cyber criminals in June.
Bithumb said it is "temporarily" unable to open new accounts; so it is likely to lose its market leader status if the current situation continues for a while.
The exchange sent a text message to its customers saying it would't be able to open new accounts starting Aug. 1.
"It is still unclear whether we can reach a deal with NongHyup Bank," said a Bithumb official.
"We are currently discussing the issue and will do our best to settle it as soon as possible."
However, the task seems daunting because Nonghyup is unlikely to renew the contract with Bithumb anytime soon.
"We have decided not to renew the contract because Bithumb still has problems in protecting customers' information and preventing money laundering," said a bank official.
Bithumb had a similar deal with Shinhan Bank, but the bank terminated the contract after the nation's financial regulator implemented the real-name system for cryptocurrency trading accounts in January.
Bithumb said existing virtual account holders can "use deposit and withdrawal services as usual," but if it fails to renew the contract with NongHyup, the lender may stop all services for the crypto exchange.
If it does, even existing account holders won't be able to trade virtual coins through Bithumb.
NongHyup's decision is attributed to the June cyberattack against Bithumb, after which the exchange immediately suspended its deposit and withdrawal services while reporting the matter to the Korea Internet & Security Agency.
The attack followed a similar one earlier this month in which Korea's seventh-largest cryptocurrency exchange Coinrail lost 40 billion won.
Korea has become one of the busiest virtual coin-trading countries in the world, and Bithumb is the nation's largest crypto exchange in trade volume. It is also the world's seventh-largest exchange with daily trading volume of 500 billion won worth of virtual coins.
The nation's largest crypto exchange Bithumb is likely to lose its leading status as it has ceased creating real-name virtual accounts due to its failure to renew a contract with NongHyup Bank.
The lender recently decided to suspend the accounts contract with Bithumb amid mounting concerns about its poor security systems as the exchange lost an estimated 35 billion won ($31.5 million) worth of virtual coins to cyber criminals in June.
Bithumb said it is "temporarily" unable to open new accounts; so it is likely to lose its market leader status if the current situation continues for a while.
The exchange sent a text message to its customers saying it would't be able to open new accounts starting Aug. 1.
"It is still unclear whether we can reach a deal with NongHyup Bank," said a Bithumb official.
"We are currently discussing the issue and will do our best to settle it as soon as possible."
However, the task seems daunting because Nonghyup is unlikely to renew the contract with Bithumb anytime soon.
"We have decided not to renew the contract because Bithumb still has problems in protecting customers' information and preventing money laundering," said a bank official.
Bithumb had a similar deal with Shinhan Bank, but the bank terminated the contract after the nation's financial regulator implemented the real-name system for cryptocurrency trading accounts in January.
Bithumb said existing virtual account holders can "use deposit and withdrawal services as usual," but if it fails to renew the contract with NongHyup, the lender may stop all services for the crypto exchange.
If it does, even existing account holders won't be able to trade virtual coins through Bithumb.
NongHyup's decision is attributed to the June cyberattack against Bithumb, after which the exchange immediately suspended its deposit and withdrawal services while reporting the matter to the Korea Internet & Security Agency.
The attack followed a similar one earlier this month in which Korea's seventh-largest cryptocurrency exchange Coinrail lost 40 billion won.
Korea has become one of the busiest virtual coin-trading countries in the world, and Bithumb is the nation's largest crypto exchange in trade volume. It is also the world's seventh-largest exchange with daily trading volume of 500 billion won worth of virtual coins.
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