Deposits on ‘Big Four’ South Korean Exchanges up 1,368%

Source: Adobe/willyam

South Korea’s largest four largest crypto exchanges are sitting pretty after two of their employees received operating licenses from the financial regulator and data revealed they are now inundated with customer deposits. Bank commissions are also booming, leaving the “oLigopoly” of four ready to rule unchallenged over the country’s crypto industry. But customs officials say they have discovered dozens of incidents of illegal Kimchi premium traders making “illegal transactions.”

Upbit, the market-leading exchange, and Korbit, the nation’s first trading platform, appear to have received their approvals within hours of each other, reports iNews24 and Chosun. Bithumb and Coinone, the remaining two members hope their own licenses will be approved soon. The group of four was the only trading platform that entered into the main banking partnerships that allow them to offer customers real, name-approved individual banking. Without banking, exchanges have been told that they will not be allowed to offer FIAT HKD pairings from the 24th of last month.

Meanwhile, Kyunghyang Shinmun reported that data compiled by the financial regulator and presented to MP Yoon Chang-hyeon, a member of the National Assembly’s political committee, shows that deposits with real accounts on the big four exchanges have a cumulative total of 7,75 billion. This figure represents an impressive increase of 1,368% compared to June last year, when similar figures were last compiled.

In addition, the number of real-name verified accounts with partner banks has increased by 777% since last year, with over 7.3 Million such accounts now opened.

The banks are also basking in success, as the figures show. As the number of transactions increased, fees paid by exchange customers also increased.

In the second quarter of the current financial year alone, K-BANK (partner of Upbit), Nonghyup Bank (partner of Bithumb and Coinone) and Shinhan Bank (partner of Korbit) received total commissions of USD from exchanges. This figure represents an increase of 3,139% in the third quarter of fiscal 2020, the media company reported.

But regulators and customs officials have been looking for signs of foul play among Big Four clients and the clients of other trading platforms, claiming this week that they have identified dozens of illegal transactions.

According to SBS, the Korean Customs Service detected illegal overseas transactions with cryptoassets in the amount of USD 684m in the period January-August 2021, which is an increase of x40 compared to 2020. It is believed that a large part of this figure is the work of Kimchi premium opportunists – who transferred fiat abroad to make crypto purchases at lower prices before “dumping” coins on domestic exchanges, where they sold for up to 8% -10% higher.

According to data, the Kimchi premium is making a very gradual comeback with rising prices, with token trading around 2% higher than on international platforms.

South Korean law requires that all foreign transactions worth more than $ 5,000 must be reported to a customs office. However, those who want to make money quickly by transferring funds abroad have increasingly tried to bypass customs officers and throw them off the market with crypto by working on foreign platforms if possible.

In 2017, on the other hand, only an illegal crypto money transfer worth around $ 82,000 was recorded.

But now that the “big four” seem to be moving with great haste under the regulatory wing of the Financial Services Commission and its Financial Intelligence Unit Agency, these opportunists are being hammered with the full force of South Korean law: the big four have duly handed over their clients’ trading records, now exclusively with anonymity-free accounts, to tax and customs inspectors – leading to raids, seizures of tokens and even some forced liquidations.