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Bithumb bans trading from countries with no anti-money laundering measures

Rumors of stake sale to local cryptocurrency exchange resurface

South Korea's cryptocurrency exchange operator Bithumb (Yonhap)
South Korea's cryptocurrency exchange operator Bithumb (Yonhap)
Bithumb, a South Korean cryptocurrency exchange operator, said Tuesday that it has put restrictions on crypto trading accounts held by users staying in regions that have not adopted anti-money laundering measures.

A total of 21 nations are currently on the watchlist for failing to implement anti-money laundering measures issued by the Financial Action Task Force, an intergovernmental body that sets international standards to prevent global money laundering and the financing of terrorism.

Iran and North Korea have been blacklisted while 19 nations, including Yemen, Syria, Pakistan and Botswana, are on the gray list. Countries that support terror funding and money laundering are placed on the blacklist while nations on the gray list are considered safe havens for these activities, according to the task force.

The local crypto exchange firm has banned users from the 21 nations from opening new accounts and frozen the accounts of existing users.

“The company will continue improving its system to protect investors, and enhancing transparency in the crypto market,” a Bithumb official said.

While verifying the identity of customers, the Korean firm is also beefing up its “know your customer” processes.

Joining forces with Octa Solution, it has developed anti-money laundering solutions tailored for virtual assets. The crypto exchange firm has also adopted anti-money laundering solutions provided by US blockchain analysis firm Chainalysis and risk management solutions firm Dow Jones Risk & Compliance, it said.

Meanwhile, the rumored stake sell-off of Bithumb has resurfaced recently as US investment bank JP Morgan and the world’s largest financial derivatives exchange, CME Group, are reportedly mulling whether to acquire majority shares in Bithumb.

“JP Morgan has been talking with a person entrusted by one of Bithumb’s large shareholders over the acquisition,” a market insider was quoted as saying by local news outlet MTN.

The source also added that CME Group had sent a letter of intent to Bithumb in February about acquiring a controlling stake in the local firm.

In 2018, Bithumb Chairman Lee Jeong-hoon tried to sell the company to local gaming firms Netmarble, Nexon or NCSoft, but no deal was reached at the time. Last year he started negotiating with global companies, including Chinese crypto trading services firm Huobi. The Korean crypto exchange is also said to have been in talks with NXC, a parent company of Nexon, until recently.

It is estimated that the number of average daily users on the Bithumb platform last month reached 1 million while the daily transactions came in at between 5 trillion won ($4.4 billion) and 7 trillion won.

Dunamu, the operator of digital coin trading platform Upbit, is valued at some 2 trillion won while US crypto exchange Coinbase is estimated to be valued at 80 trillion won.

“Lee may hope that the corporate value of Bithumb reaches 2 trillion won at least,” an official in the crypto market said.

By Kim Young-won (wone0102@heraldcorp.com)
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