Bithumb Temporarily Stops Accepting New Clients amid Reported Bank Woes

Local media claim a major bank refused to renew its contract with Bithumb, while the exchange says new account creation has been suspended because of “virtual service account improvement.”

Bithumb, one of South Korea’s largest cryptocurrency exchanges, has stopped accepting new clients as of August 1.

The Business Korea news outlet cited banking industry insiders as saying the reason was Bithumb’s failure to extend its contract with NH Nonghyup Bank. The arrangement expired at the end of July.

According to a Bithumb blog post dated July 31, the platform was undergoing service improvement, and the opening of new accounts service was temporarily closed. Clients who already have an account with Bithumb can continue trading and transferring funds as usual. Further announcements are yet to be made.

According to the Business Korea report, Bithumb chose not to extend its contract with another financial services institution, Shinhan Bank. However, it had been looking to renew the agreement with Nonghyup Bank, which rejected the request, quoting problems with client protection.

“We have decided not to renew the contract because Bithumb still has problems in protecting consumers and information and preventing money laundering,” a bank official told the publication.

The person was referring to the recent hack of Bithumb, which led to the exchange being robbed of around $31 million. Later, the company managed to recover around half of the funds stolen.

A Bithumb representative told Business Korea the exchange had reached an agreement with the bank over a contract renewal.

“We are planning to iron out our different views on some legal expressions and start issuing virtual accounts soon,” the company official said.

Financial industry experts, however, expressed doubts this would happen as Nonghyup Bank appears to be quite firm in its position.

This does not mean Bithumb will halt fiat deposits and withdrawals, but it will have to use a “hive account,” which would lead to much hassle for clients.

According to Business Korea, Bithumb is the only local exchange from the “Big Four” group to have failed in renewing its contracts with commercial banks. Coinone, for example, has extended its agreement with Nonghyup Bank. Upbit did so with the Industrial Bank of Korea, while Korbit got an agreement with Shinhan Bank.