Bithumb, recovering from a large cyberattack that took millions from the exchange and damaged its public image, has announced that they will not be issuing new accounts because they cannot secure contracts with their former banking partners.
South Korea based exchange Bithumb recently began resuming deposit and withdrawal services after a devastating attack. Bithumb is trying to return to its full functionality as an exchange and virtual bank, but after the $31 million hack last June, it appears financial institutions are wary of getting into business.
As we touched on in our previous report, Bithumb is having trouble renewing the contracts it previously held with the Korean financial sector due to fears that the cyberattack created surrounding Bithumb's security.
Bithumb has stopped issuing new virtual accounts following Nonghyup Bank's refusal to renew its former contract. An official with the bank told Business Korea, "“We have decided not to renew the contract because Bithumb still has problems in protecting consumers and information and preventing money laundering.”
Bithumb's withdrawal and deposit services rely on the integration of bank infrastructure, and though they can still operate by using what are called 'hive account' services, this will reportedly be hugely inconvenient for investors.
Bithumb is still one of the four largest exchanges in South Korea, but the other three have all secured their contracts again, including Coinone, who renewed its contract with Nonghyup Bank.
The effects are already being noted, with Coindesk noting that the exchange saw a 40% drop in trading volume following the news.
Bithumb remains committed to moving forward while improving security and iron out concerns the banks have on their ability to protect cryptotraders, but for now, Bithumb is put at a serious disadvantage in its competition over South Korea's crypto ecosystem.