Upbit Hack Endangers Partnership with Korean Bank

Upbit’s partnership with IBK Bank in Korea could be terminated later this month as a result of questions about the exchange’s security and solvency following the November hack leading to nearly $50mil in cryptos being lost. This bank partnership is crucial for Upbit to continue operating in Korea as it provides the exchange with real-name deposit and withdrawal accounts required for cryptocurrency exchanges to trade with a KRW pair.

Since the hack in which 342,000ETH were sent to unknown wallets and have since traveled around the market in smaller and smaller increments, Upbit suspended for a time withdrawals of many cryptos and KRW.

Withdrawals of other cryptocurrencies have resumed, but users are still prohibited from withdrawing KRW and BTC.

Although the exchange recorded profits upwards of $400mil last year, their ability to maintain their growth and protect their assets has come into question. The platform has also not allowed users to create new accounts since early 2018. Their sudden loss of liquidity would likely be a negative factor influencing the renewal of the exchange’s contract with IBK Bank.

Doo Wan Nam, Business Development for Asia Pacific at MakerDAO says “Upbit is still a reputable exchange and it would be unfortunate if that happens.”

There are precedents where exchanges have been allowed to keep their real-name account access. Shortly after securing their partnership with Shinhan Bank, Korea’s oldest bank, a large voice phishing and loan fraud ring masquerading as representatives of Korbit scammed users of their account information and assets.

Bithumb has also managed to keep its bank partnership.

Nam continues, “considering Bithumb has maintained its relationship with NH Bank despite its previous hacks, I don’t think IBK terminating its relationship with Upbit is likely.”

At the end of the day, however, it has been noted that all the banks in South Korea providing real name accounts for crypto traders are less and less eager to offer such individual accounts as a result of the decreasing genuine trade volume across all exchanges.