Upbit real-name accounts in question
Upbit, a cryptocurrency exchange operated by Kakao’s Dunamu, is facing the end of its real-name account contract with the Industrial Bank of Korea (IBK) at the end of January. There’s speculation that Upbit may not be able to update the contract, in part because it lost around 58 billion won worth of Ethereum in an apparent hack of a hot wallet. “We’ll know whether the contract will be extended in late January,” said a spokesperson for Dunamu. IBK just said, it is “reviewing whether to extend the contract.” But industry insiders generally believe Upbit will get a contract extension since it is the largest cryptocurrency exchange in the industry in terms of 24-hour trading volume. Other domestic cryptocurrency exchanges are also facing the end of contracts on real-name accounts with banks at the end of the month. Cryptocurrency exchanges sign real name account contracts with a single commercial bank. The account allows deposits and withdrawals by those who have opened an account at a contracted bank. The system was adopted in January 2018. Bithumb and Coinone inked deals with NH Bank, while Korbit signed a contract with Shinhan Bank. They renew the contracts every six months. If the cryptocurrency exchanges fail to renew the contract, they are basically unable operate because users won’t be able to make exchange cryptocurrency for won. Effects of the Ethereum hacking incident Industry insiders believe the Ethereum hacking incident of Nov. 27 may have an impact on the contract renewal. The hack resulted in the loss of 342,000 Ethereum. Upbit halted the deposit and withdrawal of cryptocurrency following the incident. Until now, withdrawals are not allowed, other than of won and Bitcoin. Upbit minimized the impact of the hack by covering the loss from its own asset, but it faced reputational damage, possibly making IBK reconsider the contract renewal. Dunamu argues that there still is a chance. “The evaluation result will be disclosed late January, and only then will we know the result. IBK is the arbiter, so we don’t know how it will go,” said a spokesperson from Dunamu. A spokesperson from IBK said that it is “reviewing the contract.” IBK is facing its own struggles due to Yoon Jong-won, the newly appointed CEO of IBK. The labor union is protesting the appointment of Yoon, who is a former senior secretary to President Moon Jae-in, because they believe Yoon was appointed due to his political connections. Industry insiders believe not renewing the contract with Upbit will only cause more trouble for IBK, and therefore, Upbit will be able to renew the contract.