Major Crypto Exchanges Join Forces to Stamp Out Market Manipulation and Money Laundering
Four of the largest cryptocurrency exchanges in South Korea have established a hotline to report any unusual trading or transactions that may have links to criminal activities, such as voice phishing and pyramid schemes. The anti-money laundering (AML) initiative is designed to address a major challenge in – and constant criticism of – the crypto ecosystem.
According to the announcement, Bithumb, Corbit, Coinone and Upbit will work together to block accounts that are determined to be engaging in suspicious activity. A shared database will allow the four trading platforms to exchange critical data in real time, flagging suspicious wallet addresses.
Reports local news outlet Yonhap,
“They are now able to instantly check any wrongful transactions made at other exchanges and take necessary measures, such as blocking their own related accounts.”
“The cooperative step against money laundering via cryptocurrencies is expected to boost the soundness of the industry and to better protect consumers.”
The four exchanges plan to expand the network by inviting additional crypto exchanges to pool information.
In an effort to curb criminal crypto activity, 14 South Korean exchanges established the Korea Blockchain Association last year. The exchanges, including Upbit, Bithumb and OKCoin, created a set of rules to address abnormal transactions.
According to the Korea Times,
“The rules suggest domestic crypto exchanges (1) manage clients’ digital coins and their own separately, (2) cope with abnormal transactions quickly, (3) float new crypto with enhanced client protection system, (4) hold a minimum equity of 2 billion won, and (5) publish regular audit and finance reports.
The association will also look into member companies’ systems to check if there are loopholes that could be used for insider trading, price rigging and money laundering.”
At that time, however, an official said that there were a number of “issues left unsettled.” The newly formed hotline is expected to add an another critical layer of checks and balances, confirmation feedback and transparent reporting.
Industry leaders are aware that the industry is rife with criticism about market manipulation, pump-and-dump schemes, exit scams, wash trading and enough shenanigans to scare off mainstream participants. As such, the South Korean initiative is part of a much larger effort among major crypto trading platforms to work together in order to stamp out suspicious trading activity, protect consumers and address legitimate concerns among regulators who say the markets are manipulated.
In August, the Winklevoss twins, founders of crypto exchange Gemini, launched the Virtual Commodity Association Working Group with participants Bitstamp, bitFlyer and Bittrex to improve transparency, accountability and security on digital asset trading platforms, and to advance the adoption of cryptocurrencies worldwide.