Regulator Identifies ‘Fake’ Crypto Exchange Bank Accounts

  • July 29, 2021
  • Tim Alper
  • 47

South Korea’s top financial regulator, the Financial Services Commission (FSC) said it has identified 14 “fake” bank accounts that are or have been used as fiat on/off ramps by domestic crypto exchanges.

The FSC examined a total of 94 accounts belonging to 79 crypto exchanges and said it discovered that in 14 separate instances, the crypto exchanges’ bank accounts did not match up with the name of their owners.

Under South Korean banking and anti-fraud laws, firms must register their banking activities using corporate accounts bearing their companies’ own names. However, in all 14 instances, exchanges had either conducted their business using individual, private accounts in the names of one of their employees or had registered accounts in the names of other legal entities.

Per the Hankyoreh, the FSC has ordered banks to suspend all trading on the accounts in question, and has handed over all 14 cases to the police and the prosecution service.

The FSC stated that it examined data from “more than 3,000” domestic financial companies in order to establish the identity of account holders and link them to crypto exchanges.

Currently, only the “big four” crypto exchanges – Upbit, Bithumb, Coinone and Korbit – make use of real name and social security number-verified bank accounts, with all customer funds kept separately. However, all other domestic exchanges use shared banking accounts, using what the media outlet called “various ways” to collect and deposit their customers’ fiat payments and KRW withdrawals.

The majority use business accounts or payment agencies that specialize in providing such services to exchanges and similar service providers.

However, from September 24, all exchanges will need to abide by real name and social security number-verified banking protocols or face closure. This has led to fears of a “shutdown crisis” as the deadline looms.

Even the “big four” are not guaranteed success in their respective bids to stay open: Their banking partners have all extended their existing deals until September 24, a sign that banks are prepared to wait to see if the government will compromise. The industry is currently facing the very real prospect that no exchanges will make the deadline, effectively rendering crypto trading illegal in the country.



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