Huobi Korea to shut down operations, citing tough business environment
Huobi Korea, the Korean arm of cryptocurrency exchange HTX, announced its closure effective January 29. This decision, as stated in a recent announcement, is attributed to a challenging business environment.
Despite the shutdown, the platform assured users that they would still be able to withdraw their funds.
Founded in 2017, Huobi Korea separated from its parent company, formerly known as Huobi Global, in January 2023. This closure follows similar announcements from other smaller South Korean exchanges like Cashierest and Coinbit in November, and CoreDAX, which also suspended trading services and reportedly delayed wages.
South Korea’s cryptocurrency exchange landscape is dominated by five major players — Upbit, Bithumb, Coinone, Korbit, and Gopax. These exchanges account for 99.6% of the country’s total crypto trade volume as of June 30, 2023, according to a Financial Services Commission (FSC) report. They are also the only ones to have successfully registered with local financial regulators.
Strict standards set by a 2021 amendment to the financial reporting law in South Korea require exchanges to maintain a partnership with a local bank for offering fiat-to-crypto services. These banks issue real-name deposit and withdrawal accounts for users, a measure aimed at minimizing money laundering and price manipulation risks.
Out of 21 exchanges, including Huobi Korea, that failed to secure such a bank partnership, only minimum information security requirements were met, limiting their services to crypto-to-crypto trades. The FSC report indicates that 10 of these 21 exchanges reported zero revenue in transaction fees in the first half of 2023.
The upcoming “Virtual Asset Investor Protection Act,” set to be enacted in July this year, will impose additional responsibilities on exchanges for the safekeeping of user funds. This includes maintaining 80% of total user funds in cold wallets and registering insurances for user compensation in case of hacks or system failures.
Earlier in December, Huobi’s former parent HTX saw a substantial $258 million in net outflow since it resumed operations on November 25, following a major security breach.
The breach, which resulted in the loss of $30 million worth of crypto tokens, led HTX to temporarily suspend withdrawals and deposits. The exchange downplayed the severity of the outflow, calling it “a small fraction of our total reserves” and asserting the platform’s stability and robustness. He reaffirmed HTX’s commitment to offering a “secure and seamless” trading experience.