Sam Bankman-Fried, the crypto billionaire who has emerged as the savior of the digital asset industry, is reportedly about to close a deal to acquire South Korean crypto exchange Bithumb.
A report by Bloomberg suggests that the discussions on this takeover have been underway for several months and are now in the final stages. However, the financial details of the acquisition were not revealed and Bithumb, which has over 8 million registered users, refused to comment on the report.
Sam Bankman-Fried has been trying to help the stumbling crypto industry with many bailouts of struggling firms announced this month to pull them back from the brink. He is reportedly looking to acquire a stake in the beleaguered crypto lender BlockFi as concern increases across the industry about liquidity in the wake of the recent collapse in prices.
Bankman-Fried’s quantitative research firm, Alameda Research, also came to the rescue of embattled Voyager Digital.
Bithumb, one of South Korea’s big four exchanges — alongside Coinone, Korbit, and Upbit — was facing a civil suit for breach of contract, while their top executives are facing criminal charges of fraud in Thailand. The exchange is also facing several issues from regulators in its own country, as South Korea’s authorities are cracking down on cryptocurrency exchanges to follow a new guideline for regulation.
Historically, South Korea is one of the hottest investing and trading markets for cryptocurrencies. However, authorities have been hesitant to regulate the virtual asset class, due to their belief that cryptocurrency regulation could lend legitimacy to the sector.
Exchanges without qualifications face closure
Korean regulators have taken a series of measures to curb suspicious crypto transactions. For instance, the country’s crypto exchanges are mandated to various requirements such as data maintenance, internal controls, reporting illegal transactions, and performing KYC to verify customer identities.
Less than half of Korea’s cryptocurrency exchanges met a legal deadline to put themselves under regulatory supervision. However, they still face challenges such as risks from legal breaches and an inability to convert coins into Korean won. On top of these stricter rules, crypto exchanges must obtain a security certificate from the Information Security Management System (ISMS).
Industry experts estimate that more than 35 exchanges will discontinue their operation or reduce services. They will have to cease their service either because they failed to register with the nation’s anti-money laundering body, or because they were unable to have real-name bank accounts issued by commercial banks.
Upon completing real-name verification and partnering with a local bank, digital assets platforms are required to acquire a license from the country’s Financial Intelligence Unit (FIU). This is a unit of the Financial Services Commission (FSC), the country’s top financial regulator.