In January this year, the South Korean government gave a directive that required Cryptocurrency exchanges in the country to introduce a real-name system. Last month, Nonghyup Bank barred Coinis exchange from accessing its banking services forcing the latter to file a case at a local district court. On Monday, the court ruled in favor of the exchange and dismissed the suspension.
A South Korean Court Sides With A Local Exchange
A South Korean local media has reported that the 50th Civil Affairs Division of the Seoul Central District Court has handed a local exchange victory in a case it filed against Nonghyup Bank. According to the news outlet, Coinis exchange had moved to the court after the bank blocked its deposits last month. The exchange said that this move had inconvenienced its customers and made it difficult for it to operate.
Nonghyup Bank defended its decision by saying that it was only complying with the directive issued by Financial Services Commission (FSC) under the Virtual Currency Anti-Money Laundering (AML) Guidelines. However, the court sided with exchange and ordered the bank to lift the suspension.
The Digital Daily caught up with a lawyer who was involved in this case. Kim Tae-lim said that according to the agreement between the bank and the exchange, the latter has the right to withdraw and deposit funds in the account. The lawyer added that the bank breached the agreement by refusing the exchange from accessing these services.
South Korean Anti Money Laundering Guidelines
At the beginning of this year, the government felt the need to introduce changes that would affect companies operating in the Crypto sector to control the use of the virtual currencies in money laundering. In January, the government introduced Anti-Money Laundering (AML) Guidelines that require Crypto exchanges to adopt a real-name system.
However, not all the exchanges have changed all their customers’ accounts into real-name-verification ones. Korbit, Coinone, Upbit, and Bithumb are the only exchanges that have implemented these changes in the country. Other exchanges such as Coinis have been forced to use their corporate accounts after local banks refused to provide these conversion services to other exchanges.
At Nonghyup Bank, only Bithumb and Coinone have been accessing real-name conversion services. In August, Bithumb got into a disagreement with the bank forcing the exchange to suspend the opening of new accounts. The following month, Bithumb and Coinone agreed to Nonghyup Bank demands and accepted to terminate withdrawals for non-verified accounts.
What The Court Ruling Means To Crypto Traders
According to the news outlet, Nonghyup Bank has been ‘closing the transaction’ for exchanges based on AML guidelines. The bank claims that this an anti-money laundering measure and a move to protect investors. Previously, Crypto exchanges have been left with no alternative but to comply with the orders.
The court said that Nonghyup Bank has no right to suspend Coinis transactions because of the FSC guidelines. The exchange has become the first one to file a case against a financial institution. Furthermore, the ruling is going to open room for other exchanges in the country that feel that they have been wronged by the banks to take a legal action.