South Korean Court Rules Bank’s Action to End Banking Services to Crypto Exchange Illegal

South Korean Court Rules Bank’s Action to End Banking Services to Crypto Exchange Illegal

A court in South Korea has ordered that the decision by a commercial bank to stop offering banking services to a cryptocurrency exchange was unlawful and must, therefore, be rescinded.

According to the Central District Court’s 50th Civil Affairs Division, the move by South Korean commercial bank Nonghyup to discontinue offering deposit and withdrawal services to Coinis cryptocurrency exchange was both unfair and illegal. The South Korean bank had declared that it based its decision on the anti-money laundering guidelines published by the regulator Financial Services Commission (FSC), according to a statement by Zdnet Korea.

Per a lawyer for the plaintiff, the move by the bank to stop providing banking services to the crypto trading platform constituted a breach of contract. This is because the two parties previously had a business agreement which the bank flouted.

Once Bitten, Twice Shy

While Nonghyup’s work has now been ruled unlawful, it was not uniquely out of the blue particularly given that the South Korean commercial bank had been a target of regulators in the new past with concerns to its business relationships with cryptocurrency trading platform.

South Korea Urgently Needs Crypto Legislation, Lawyer Association Says

At the beginning of the year, commercial banks rendering banking services to cryptocurrency exchanges in the Asian country came under increased inspection from regulators intent on cracking down on uncertain trading and money laundering and Nonghyup highlighted prominently amongst the six banks that were initiated to be investigated. The others were Korea Development Bank, Industrial Bank of Korea, Shinhan Bank, Kookmin Bank, and Woori Bank.

Three months later Nonghyup was also between three banks that the Financial Services Commission and the Korea Financial Intelligence Unit indicated would undergo on-site reviews with concerns to the services they offered cryptocurrency exchanges. Just like in the initial investigation, this one was being conducted to ensure that the financial institutions were adhering to the Know-Your-Client and Anti-Money Laundering rules. The two other banks were Hana Bank and Kookmin Bank.

The Anti-Crypto Bank?

Coinis is not the first South Korean crypto exchange to encounter fallout with Nonghyup Bank though. Three months ago, the South Korean commercial bank failed to renew a contract with the Bithumb cryptocurrency exchange. This was two months behind the transaction had been hacked and cryptocurrencies worth about US$30 million stolen from a hot wallet.

At the time, Nonghyup required that its reason for not rebuilding the contract was laxity on the part of Bithumb.

“We have chosen not to renew the contract because Bithumb still has problems in protecting consumers and information and stopping money laundering,” an official of the bank was extracted saying as reported.

#South Korea #Crypto Exchange #Crypto news

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