The deposit of KRW has been suspended since the 14th…Poor trading volume in BKRW market Imprudent KRW deposit service of Binance KR caused a crisis.
Binance KR had a friction with the bank in the process of using the corporate account of BXB, a Korean market partner, as a bill collecting account, so deposit and withdrawal of KRW has been suspended from the 14th to the present.
Binance KR entered the Korean market by appealing that it shares orderbooks with Binance Global and that it provides deposit and withdrawal service for KRW. However, it faced a crisis due to this situation.
Binance KR has, in a sense, courted the disaster. Binance KR notified the bank just two days before launching the service that it would use the account to run a cryptocurrency exchange. Binance KR was able to predict the risk since Korea prohibits the use of corporate account for bill collecting. Even though, it started the service recklessly.
Binance KR said there was no legal issue because the bank was notified before the account was used.
■Expectation of users declined due to suspend the KRW deposits…Daily trading volume of BKRW market is about 200 million won
KRW trading market of Binance KR is not activated as deposits in KRW is suspended. Currently, the daily trading volume of the BKRW market is around 240 million won. BKRW is a KRW-based stablecoin, and if you deposit KRW, it is converted to BKRW and used for trading.
With BKRW, you can trade a total of 3 coins: BNB, Bitcoin, and Ethereum. However, the trading volume for each coin is less than BKRW, so users complain about it. If the trading volume is low, there is not enough bid and offer price, and as a result, the transaction is not well executed.
Currently, the trading volume of BNB in the BKRW market is around 3.3 million won, and Bitcoin and Ethereum are respectively worth 114 million won and 125 million won.
Considering that a free transaction fee event is being held as a service launching event, the reason for the low trading volume is that it is impossible to deposit KRW and new funds are not attracted.
Whether to provide KRW trading services is a very important factor in the Korean cryptocurrency trading market. This is because investors in Korea prefer to trade in KRW. Upbit provides three markets of KRW, Bitcoin, and Tether, and the trading volume of the KRW market accounts for 98.1%.
For Binance KR, the action to suspend deposits in KRW is an issue to be solved as soon as possible. If this action is prolonged, users who are unable to find any other advantages are likely to be disappointed and leave.
■Why does Binance KR suspend deposits in KRW?
According to Binance KR, BXB visited the branch of Woori Bank, which opened a corporate account on March 30, and delivered an official document to start the cryptocurrency related activities with the account.
Binance KR signed a document saying that the account would not be used for activities related to virtual currency (cryptocurrency) when the account was opened. Binance KR explained that it followed the procedure because the document said, “If you want to start the virtual currency related activities, you need to notify the bank.”
Unlike BXB, which interpreted the document that it is only necessary to notify the bank of virtual currency-related activities, Woori Bank announced on April 9 that it would suspend trading of the account on April 20. Woori Bank insisted that “They signed the statement that they were not a cryptocurrency exchange when opening an account and were obliged to negotiated when dealing with cryptocurrencies, but they did not.” And the actual account suspension took place on the 14th, earlier than the original notice.
Since then, the court has granted an injunction requested by Binance KR, but it is still impossible to deposit KRW. Binance KR said, “In mid-April, we detected abnormal activities in the transactions of some customers and stopped the service.”
The industry regards this as part of the ‘competition’ between the exchange and the bank. A lawyer said, “The bank may have allowed the deposit after the decision of the court, and it may have suspended immediately for some other reasons.” “It will not be difficult for the bank to find the problems on the exchange,” he added.
■Binance KR caused a crisis with loose business arrangement
Some people pointed out that Binance KR looked down on the regulations and launched a KRW deposit service in an inappropriate way.
In order for cryptocurrency exchanges to receive KRW, it is necessary to use real-name verified deposit and withdrawal account in accordance with the guidelines published by the Financial Services Commission (FSC) in January 2018.
However, there are no exchanges that have real-name verified accounts except for the four exchanges of Bithumb, Upbit, Coinone, and Korbit, as banks show disapproval of issuing real-name verified accounts.
Small and medium-sized exchanges use corporate accounts for bill collecting that the FSC has banned. As a result, there have been cases in which banks stop using accounts and exchanges apply for injunctions. This is because the guideline is less binding.
However, Binance KR launched the service after the amendment to the ‘Specific Financial Transaction Information Act’, which aimed at introducing a report system for virtual asset service providers, passed the National Assembly. Real-name verified account was included as a requirement for operating a cryptocurrency exchange in the Specific Financial Transaction Information Act.
There is one year before the enforcement of the Specific Financial Transaction Information Act, but the Korean cryptocurrency industry is trying to comply with all possible regulations from now on. However, the activities of Binance KR contrast with this situation.
An official of a cryptocurrency exchange said, “Other exchanges are trying to comply with the regulations, but Binance KR seems reckless.” “It is not appropriate to use a corporate account for bill collecting in this situation,” he added.
Even if Binance KR inevitably used a corporate account for bill collecting, it is inappropriate to notify the bank two days before the service is launched.
If Binance KR considers that the exchanges are trying to comply with anti-money laundering regulations after the passage of the Specific Financial Transaction Information Act, and Woori Bank does not provide accounts for bill collecting to cryptocurrency exchanges, the suspension of the account was a predictable action.
If Binance KR determined that BXB’s corporate account could not be used for depositing the exchange, it could prepare alternatives such as notifying Woori Bank faster and convincing the bank.
Binance KR said when we opened an account in January 2019, the document stated that ‘If we use this account for handling virtual currency, we will notify the bank’, and as we signed, we announced before the service was launched. “It was not an issue to negotiate with the bank,” they added.
Lim Yu-kyung(2020.04.) 韓 진출 바이낸스, 무모한 벌집계좌 운영…위기 자초
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