Prohibited from Using Corporate Accounts: 800,000 Cryptocurrency Investors May Be Blocked from Trading in Some Exchanges | BusinessKorea

Sunday, February 25, 2018

Local banks will look into whether or not exchanges that use corporate accounts (aka honeycomb accounts) are against financial authorities' anti-money laundering guidelines.
Local banks will look into whether or not exchanges that use corporate accounts (aka honeycomb accounts) are against financial authorities' anti-money laundering guidelines.
Seoul, Korea
30 January 2018 - 4:30pm
Michael Herh

As banks will look into whether or not exchanges that use corporate accounts (aka honeycomb accounts) are against financial authorities' anti-money laundering guidelines, so that investment by 800,000 members of these exchanges may be brought to a halt. As banks implement real-name cryptocurrency transaction system on January 30, they are also refusing to issue new virtual accounts for corporate account-based exchanges.

According to the Korea Blockchain Association on January 29, there are 10 exchanges which use corporate accounts instead of virtual ones and it is estimated that they have a total of 800,000 users (including duplicate users) -- 500,000 of Coinnest, 151,000 of GOPAX (Streami), 57,600 of Coinlink (Certon), 55,000 of Eya Labs, 14,000 of Coinis and 10,000 of HTS Coin. The remaining four companies were excluded from the count because they had less than 5,000 members, respectively. If you add exchanges that do not join the association, it is estimated that the number of users of corporate account-based exchanges hits one million.

It is said that these exchanges are embarrassed because it is unclear whether they will be provided with a real-name system for virtual currency trade which start on January 30. This is because banks decided to provide a new virtual account service that uses a real name system only to four companies -- Upbit, Bithumb, Coinone, and Cobit -- which had previously issued virtual accounts, citing their mounting workloads among others.

In addition, recently, banks are preparing to inspect corporate accounts in line with financial authorities' guidelines. If problems are found, accounts may be withdrawn, putting a brake on business operations.

Corporate account-based exchanges are complaining that banks are unilaterally refusing to issue new virtual accounts, making it difficult for them to compete fairly with existing virtual account exchanges and putting them in a crisis of being forced out of the market. In fact, even though Scoin had worked on building a real name confirmation system with a bank since early December of last year but the bank has notified Scoin of the suspension of the construction of the system.

"We have already executed sufficient procedures for confirming the identity of a member when receiving a new member via a corporate account," said a representative of a virtual currency exchange "It is against equity to allow only a few exchanges to issue new virtual accounts."

Some experts point out that if banks do not provide real-name transaction systems to these exchanges, members’ money will be placed in blind spots of money laundering prevention that financial authorities are pursuing.

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