The Korean Blockchain Association (KBA) has passed a vote of confidence on 12 cryptocurrency exchange platforms in South Korea.
All 12 Cryptocurrency Exchange Platforms Meet the Requirements
According to the KBA, all 12 participants in the audit passed the minimum requirements set forth by the Association. These minimum requirements included having a cold wallet, anti-money laundering (AML) protocols, and a minimum asset base.
KBA first announced the audit in April 2018 with 14 domestic exchange platforms announcing the rules for the exercise. The review is part of the KBA’s mandate to boost the transparency of the country’s cryptocurrency trading market by eliminating money laundering, insider trading and other illegal activities.
The 12 platforms audited by the KBA were Bithumb, Huobi Korea, OKCoin Korea, Gopax, Hanbit, Korea Digital Exchange (Dexco), CoinOne, NeoFrame, UPbit, Coin Plug (CPDAX), Korbit, and Coin Jest. Two platforms, Sunny7 and Komid did not complete the full KBA audit.
Jhun Ha-jin, the chairman of the KBA self-regulating committee, said that the 12 platforms still had a few security issues; however, he did not provide any further comments on the matter to prevent cybercriminals from exploiting such loopholes.
The next step after the results of the audit is the issuance of commercial bank accounts. Experts believe that new bank accounts for cryptocurrency exchange platforms will aid their expansion efforts. However, know-your-customer (KYC) provisions might hinder the rollout of bank accounts to new users. The South Korean government is vehemently against anonymous trading and will insist on a rigorous vetting process for cryptocurrency trading bank accounts.
The Recent Spate of Exchange Hacks in the Country
In June 2018, two different cryptocurrency exchange platforms—Coinrail and Bithumb—were hit by suspected hackers. Bithumb was one of the platforms involved in the KBA audit. Hackers stole $40 million and $31 million, respectively, from both platforms. Bithumb, however, released a revised damage report indicating that it had recovered close to half of the stolen funds.
The Coinrail hack coincided with a significant price decline that saw the market lose $40 billion in market capitalization. The price of Bitcoin dropped by $1,000 in a matter of hours from $7,600 to $6,700 in mid-June 2018. That decline kickstarted a difficult few weeks for Bitcoin as prices found a new bottom less than a fortnight later at $5,700.
Despite the apparent link between the Coinrail hack and the subsequent market decline, the consensus is that the former didn’t cause the latter. Allegations over price manipulation activities as well as a significant technical correction were most likely responsible for the mid-June price slump.