Bithumb, Upbit, Korbit and Coinone Eclipsing Smaller Rivals
A significant gap is opening up between the haves and have-nots in South Korea’s ultra-competitive cryptocurrency exchange market – with the biggest players passing key government security tests and intensifying overseas expansion plans.
The so-called “big four,” comprising market leaders Bithumb, Kakao Group-owned Upbit, Korbit and Coinone, all passed a security test set by the Korea Internet and Security Agency, conducted in conjunction with the Ministry of Science and Technology and the Ministry of Economy and Finance.
The test comprised 85 different elements, and was carried out from September to December last year. In addition to the “big four,” the testers found security was up to scratch at newer exchanges such as GoPax – the first exchange in the country to obtain ISO 27001 certification – as well as Huobi Korea and Hanbitco.
Media outlet Hankyung quotes Oh Yong-soo, the director of information security policy at the technology ministry, as saying, “Except for the seven exchanges that passed the test, security networks at most exchanges are weak.”
Oh also hinted that there may be fallout for exchanges that do not take measures to amend their security following the tests, saying the government would be back to “check on security improvements" at offending exchanges.
The ministries hit out at the exchanges that failed the test, stating they displayed insufficient PC and network security, inadequate wallet management, incident response and poor backup management.
Meanwhile, per eToday, the “big four” are looking to step up their overseas expansion plans. Bithumb is set to name Choi Jae-won as its new head. Choi is the man Bithumb last year charged with launching an American cryptocurrency exchange (through a partnership deal with United States firm seriesOne). Choi also has experience with major international banks such as Britain’s Barclays.
eToday states that Choi will likely be tasked with expanding the operations of the Blockchain Exchange Alliance (BXA), the brainchild of the BK Global Consortium. BK bought a controlling stake in Bithumb last year in a deal worth some USD 350 million. BXA plans to open exchanges in a range of countries, including the United States, Australia and the UK, and hopes to expand its operations into the field of cryptocurrency loans and payments.
And eToday states that despite reports that he is poised to sell his company, Kim Jung-ju, the owner of NXC, the company that owns Korbit (and Europe’s Bitstamp), may instead look to offload his company’s gaming interests – and retain his blockchain-related businesses. If so, Korbit and Bitstamp could look to open branches elsewhere in the world, and could receive a funding windfall should Kim decide to reinvest.
Coinone and Upbit, which have branches in Indonesia and Singapore respectively, are also known to be keen on expanding further into the Asian market – meaning the “big four” may potentially open up an insurmountable gulf over their domestic rivals in the year ahead.
Last month, six of the seven exchanges that passed the test voluntarily agreed to form a network of anti-money laundering measures, with real-time monitoring of suspicious-looking transactions. The exchanges also agreed to cease conducting transactions with unverified customers.