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Crypto Exchange Fined for Complicated Account Closing Process

Tim Alper
Last updated: | 2 min read

A South Korean regulator has slapped two cryptocurrency exchanges with fines after ruling that they had violated data and privacy laws. Moreover, one exchange was fined for over-complicating the process for customers to close their accounts.

Source: iStock/z_wei

Media outlet Consumerwide reports that the Korea Communications Commission (KCC) – South Korea’s answer to America’s Federal Communications Commission – conducted checks on a total of five domestic exchanges from July to September last year, and discovered that OKCoin’s Korean branch and Coinlink had violated privacy and data laws.

The KCC also hit OKCoin Korea with a second fine of the same amount, ruling that the company had over-complicated the process for customers to close their accounts – signing up for an account was found to be relatively easy, while closing an account required a number of complex steps.

The KCC found that OKCoin Korea had broken privacy regulations by failing to maintain mandatory data logs. South Korean law requires that financial companies compile and retain data logs, tracking when customers log in to their accounts. The companies must retain this information for a period of six months, and conduct regular, monthly checks on data to ensure it has not been compromised. The KCC also found the Coinlink exchange guilty of similar violations – and handed both companies fines of around USD 6,300. A number of banks were also found to have fallen foul of the same offences.

However, the regulator stated it was satisfied with the privacy policies of rival exchanges GoPax, KBlockchain and Coinnest.

Meanwhile, another South Korean exchange, CoinZest, has been attempting to boost its public image after an embarrassing airdrop-gone-wrong earlier this month. Senior CoinZest executives, including the company’s CEO, held an anti-phishing workshop with Seoul police. Per ZDNet Korea, CoinZest shared information on how exchanges fight voice phishing or hacking attempts and how they use Know-Your-Customer (KYC) policies. Police investigators also explained their protocol for responding to exchange-related incidents.

This week, the “Big Four” exchanges in the country – Bithumb, Upbit, Korbit and Coinone – also announced they have formed a mutual anti money-laundering network, comprising a “hotline” whereby the exchanges share real-time information about suspicious activity. Newsis reports that the group will seek to involve other traders in its alliance.

Also earlier this week, the Bank of Korea (BOK), the nation’s central bank, said that issuing a digital fiat was “not necessary in the immediate future,” although it did not rule out reconsidering its stance at a later date. The BOK issued a report stating that digital fiats were more suitable for “nations like Sweden,” per Money Today, but stated that cash still plays a vital role in the South Korean economy – something that could be undermined should a digital fiat be adopted.

The BOK has been advised to consider issuing a digital fiat by leading economic figures, including officials at the Korea Institute of Finance.