In South Korea, an Agricultural Bank called, Nonghyup which terminated the terms of a contract signed with Coinis Crypto exchange, has been reprimanded by the Seoul Central District Court. According to court, the accused had unlawfully restricted the local crypto exchange from making transactions.
This was after the Bank had decided in September, that it will be terminating its partnership with the digital asset exchange. When Coinis filed a request in court for the reversal of the suspension, the case was ruled in their favour. As a result, their deposits and withdrawals will still be processed by the Bank.
From the viewpoint of the Bank, the motive behind the breach of contract between Coinis is because of the anti-money laundering guidelines issued by the country’s Financial Services Commission (FSC). The Bank as with several others who transacted with Crypto exchanges were monitored by the Federal regulators to establish if illegal activities were conducted in their premises.
In August, South Korea’s Financial Services Commission and Financial Intelligence Unit had specified that the Bank would be among those to undergo an On-site inspection. This was to ensure that this organization had followed guidelines such as Know-Your-Client, which was specified by the regulators. Therefore, it didn’t come as a surprise when the Nonghyup Bank suddenly decided to reverse its terms.
Coinis is among several other crypto exchanges that have been limited by the same bank. This is because one of the biggest South Korean exchanges, Bithumb, had faced a similar problem in August. Here, the Nonghyup Bank had refused to renew the terms of the contract binding the two organizations.
According to the Bank,
We have decided not to renew the contract because Bithumb still has problems in protecting consumers and information and preventing money laundering.
The lack of a banking partner resulted in Bithumb’s suspension of the issuance of KYC linked virtual accounts to its customers. This made it impossible for new customers to make deposits and also withdraw directly from the Bank as was previously the case. On the bright side, the blockade didn’t affect existing accounts that were already linked by the bank.
South Korea is one of the countries with strict rules when it comes to cryptocurrencies. In 2018 alone, several ICOs have been banned even though the G20 (Group of Twenty) has made efforts to create uniform regulations. The country’s Financial Services Commission had also stated that they are not entirely against cryptocurrency.