It’s 2019, and cryptocurrency exchanges are hanging out – and feeling – the pressure.
As we inch closer and closer into the new year, digital currency regulation is becoming more the norm. While a time existed when traders talked about it and likely even feared it, every day brings us news regarding legislative updates and new laws.
What Are Crypto Exchanges Up To?
So, how do cryptocurrency exchanges fit into all this? Where’s their place in this new world of rules and legal tender, and how are they dealing with the newfound stress of having to provide added security for their customers? This, like many elements, is a two-sided coin that executives are trying their best to handle, and while not everyone has jumped onboard just yet, others are beginning to work their magic.
This is occurring in South Korea, arguably one of the biggest bitcoin hubs on the planet. At one time, the country accounted for roughly one-quarter of the world’s cryptocurrency transactions, though the regular price falls of bitcoin and its altcoin counterparts combined with the heavy influx of crime 2018 bore witness to brought about a new attitude of fear and concern. South Korea ultimately took more steps to ensure crypto-trading was safe, and it started out by banning initial coin offerings (ICOs). To this day, such funding escapades are not permitted within South Korea’s borders.
United We Stand; Divided We Fall
Many exchanges in the country seem to be mounting together. A digital army, if you will, to fight against the ongoing wave of hacking and cybercrime that continues to plague the country. Among these exchanges are Bithumb, Upbit, Corbit and Coinone. The four mega-platforms have huddled together and are now sharing real-time wallet information with each other regarding any suspicious activity executives might see as phishing attempts or potential pyramid schemes.
The news comes only months after many investors resisted the idea of newfound regulation regarding crypto activity. In addition, an amendment was made to South Korea’s anti-money laundering proclamations which requires banks servicing crypto exchanges to heighten their monitoring of related bank accounts.
South Korea was victim to several crypto hacks throughout 2018. Bithumb and Coinrail, for example, both had approximately $30 million and $40 million stolen from their stashes, which potentially explains their roles in the new “group attack scheme” these exchanges have set up.
Cracking the Whip on Those in Charge
However, while cryptocurrency exchanges are handing out pressure, they’re also feeling it as well. Long gone are the days when a hack occurs, and an exchange can offer an excuse as to why they can’t compensate their victimized customers. Long gone are the days of saying, “Oh, we simply don’t have the funds” or “We’re not a licensed bank and we don’t offer insurance.”
An exchange in Italy was recently ordered to pay back nearly $200 million in stolen cryptocurrency funds to all affected customers. The exchange is BitGrail, and the total lost near the beginning of last year amounts to roughly $170 million in assorted crypto monies. An Italian judge is now saying that the exchange was personally responsible for the loss, and that it must pay back all customers who lost funds in the disappearance within the company’s means.
What Happened in Italy?
The founder is named Francesco Firano. Court documents suggest that he repeatedly fumbled with security issues related to the private keys of exchange users, and even moved customer funds into wallets directly under BitGrail control. In addition, the judge overseeing the case suggested that Firano had not installed the appropriate safety measures to prevent cryptocurrency from being repeatedly withdrawn without authorization.
Aside from repaying the lost funds, Firano must also forfeit his personal assets and declare bankruptcy as part of the legal deal.