Hanbitco Decides to Cease Operations Due to Regulatory Issues and Market Deterioration

Hanbitco, a cryptocurrency exchange in South Korea, has announced that it will cease operations on May 16th. The exchange notified the public of its impending closure via its official website on the 9th, stating that despite significant customer support, it is halting operations. Registration for new members and deposits of digital assets have already been suspended, with support for trading listed digital assets set to end on May 16th. Customers will have until July 16th to withdraw their digital assets.

Despite obtaining a Virtual Asset Service Provider (VASP) license in 2021, following the enactment of the Specific Financial Information Act (Special Act), Hanbitco was unable to pass the Financial Intelligence Unit’s (FIU) review, thwarting its transition to a fiat currency exchange. Notably, the FIU determined that Hanbitco did not meet the reporting requirements, including its anti-money laundering (AML) system. Consequently, in 2023, Hanbitco was fined approximately 1.99 billion won for violating customer verification obligations and transaction restriction duties.

Since 2023, a total of six companies, including Hanbitco, have announced the cessation of operations in the domestic coin market industry. The exchanges that have closed include Cashierest, Coinbit, Huobi Korea, Probit, Ten and Ten, and OKBit. The closure of these firms primarily occurred following the termination of fiat transactions, leading to deteriorating profitability. The instability of the market and inadequate regulatory frameworks have accelerated these phenomena.

In Hanbitco’s case, despite continuous efforts to secure fiat transaction support from commercial banks, including signing a real-name account contract with Kwangju Bank and submitting a business type change notification, it failed to pass the FIU’s VASP change report review. Since the end of last year, domestic coin market exchanges have been closing one after another. Currently, the only operating exchanges include Foblgate, Plataex Exchange, Gdac, and Biblock, which are few in number.