Binance Korea Deposits Disabled, Faces Legal Hassle
Binance Korea today had deposits onto their virtual assets trading platform suspended just days after launching due to legal inconsistencies cited by their partner bank, Woori Bank, in South Korea.
A conflict that began on the 20th of last month escalated to the point of deposit suspension at Binance Korea from their Woori Bank partner today. Binance Korea was operating their back-end financial needs through a ‘honeycomb account’ at Woori Bank. Operating an exchange with that type of bank account conflicts with current soft standards for virtual assets exchanges in South Korea. The current standard, which will become hard law in September 2021, is to use a real-name account from a single preferred bank partner.
Coindesk Korea reported that the ‘honeycomb account’ at Woori Bank was issued in March of last year to BxB, a blockchain development company that issued its own Korean Won-backed KRWb. Binance Global announced in January of this year that they had formed a partnership with BxB to handle what would be the required stablecoin aspect of Binance Korea, explaining why BxB was in control of the account.
An official at Woori Bank said shortly after the launch of Binance Korea that they had no idea the account would be used for virtual asset deposits and withdrawals. Woori Bank claims to have been specifically told by BxB when the account was made that the account would not be used for a virtual assets exchange. Jiho Kang, CEO of Binance Co., Ltd which operates Binance Korea refutes Woori’s claim, though, stating, “[I wasn’t deliberately trying to hide the virtual assets exchange from the bank side. Before opening, our representative went to the branch where we opened the account and delivered a printed letter notifying them of the change.]”
The legal representative for Woori said today that “[If the creditor deals with virtual assets, he is obliged to consult with the debtor. [BxB] did not, so they were notified of the immediate suspension]”
Legal counsel for Binance Korea asked today that Woori Bank review the request made by the exchange to change their account status. They emphasized that it seemed unfair that the bank suspended the account before reviewing documents with the account or even notifying them of the suspension.
The Seoul judiciary called for Woori Bank to present their reasonable grounds for suspending the account based on Financial Services Commission (FSC) guidelines by tomorrow.
Although only deposits are officially suspended, others are finding it difficult to confirm their withdrawals as well. Specifically foreign account holders who are current residents in Korea are noting more hassle associated with their user experience on the platform. Withdrawals currently must be made through the popular mobile payments service Kakaopay, but many foreign residents do not have an account and may not be eligible for one.
In an attempt to remedy the inconsistency, Binance Korea rushed out a supplementary KYC request for non-Korean account holders via Google docs. Users are currently struggling with the Korean – English translations but note that the simple UI on Binance Korea is highly accessible in English. They have also hinted at embarrassment by the haphazard use of Google docs to submit personal ID information such as photos of ID cards.
Binance Korea was officially launched on April 6th this year. The launch was marked by a sense of relief among traders whom have waited what seems like years for a reputable exchange at which to do their trading. Other high-profile domestic exchanges have been a source of some frustration over the years as their leadership routinely finds themselves the subjects of fairly serious negative claims about business practices.
