The Big Crash of Major Korean Crypto Exchanges in 2019. |
Any Turning points?
South Korea, already dubbed “Kingdom Of Crypto” worldwide.
Whenever we discuss or think of crypto, blockchain, digital currency, exchanges, etc., South Korea is always a vital player that is mentioned frequently. Recently, the noise surrounding the major Korean crypto exchanges has begun to be heard from afar, becoming more incessant since the start of the long term bear market, which started back in early 2018. To be completely frank, these ‘top tier’ crypto exchanges in Korea are slowly crashing down.
In the first official criminal case related to a crypto exchange in Korea, Coinnest, one of the top tier exchange that had a frequent top spot for volume, was charged and investigated by the prosecution of Korea for fraud, resulting in Coinnest being torn apart and disappearing.
№1 top crypto exchange in Korea, Bithumb announced its urgent notice to the users on June 20, 2018, they confirmed that some cryptocurrencies, about USD3bn was stolen from some random hackers at the day before they announced.
Bithumb officials said: “All of the lost passwords will be recovered by the company, and all of the members’ assets are kept in safe cold wallets,”. Even though they continuously stressed that there is no damage to its users directly, and those damages were being solved effectively, it shows us that they have full confidence without solid reasons to back it up.
This case was not the first where users’ assets were hacked. Back in June 2017 one of the officials of Bithumb who stored the private information of users themselves was hacked, resulting in 36000 users’ information being made publicly available on the internet.
Experts criticized the behavior of Bithumb, stating that they should not store extremely confidential information of users on their server. They should be encrypting and storing offline. This case shows the real apparent lack of information management, which is extremely alarming.
UPbit backed by the largest IM service company, Kakaotalk, has also been in trouble. Three of UPbit’s major shareholders were indicted on December 21, last year, with charges of illegally manipulating the price of cryptocurrencies. They finally confessed that they were using bots, and the trading volume was manipulated by them.
Korea’s top-tier exchanges who boasted about being the leading exchanges were faking their billions in trading volume, and as a result, fell like dominos, one by one.
What about In 2019? Are they ready to face the “turning points”?
Treated as gambling platforms and illegal companies, Korean crypto exchanges, who are also getting investigated by the Korean government, are starting to step out and show us some solutions to avoid these issues.
On March 14, one of the top tier crypto exchanges, UPbit, officially released the very first “Credits and Deposit Investigation” Report, disclosing the exact amount of cryptocurrencies reserve that they have (about 103%) and KRW cash reserves (about 163%). The parent company of UPbit, Dunamu, announced the day after that they will open official social communication channels to provide accurate information about services to investors and shareholders moving forward.
The company plans to operate 6 social media channels, Naver blog, Naver Post, Facebook, Twitter, Medium, and LinkedIn to increase the contact points with customers by utilizing the unique characteristics of each channel.
Bithumb, who incurred tremendous damage from the previous hacking issue has also improved its security system and invented its own “Preventing Login Appropriation” function to prevent DDoS and various hacking issues.
The exchange shall be faithful to the main purpose of the exchange.
Recently, many exchanges have benchmarked the success of Binance and have also implemented IEO platforms as a way to generate extra revenue.
Is there any positive motion for the project and blockchain ecosystem to once again partake in random funding under a new name of ‘IEO’, clinging onto the reputation and branding of established exchanges?
The exchange’s crucial responsibilities are to ensure security and customer experience, conduct fast transactions, eliminate errors or bugs, and proactively conduct more advanced R&D to build a true “DEX”.
How long do you think centralized exchanges will last?
Why are people being seduced by the newest craze of fundraising rather than focusing their time on building the existing ecosystem and building Decentralized exchanges?
These are questions that need to be answered by key players in this space.