- Huobi Korea, once the Korean arm of global exchange HTX, recently announced the planned closure of its services
- The exchange, which severed ties with HTX last January, will cease operations on January 29
- Recent regulatory changes have left Huobi Korea struggling with vastly reduced income
Huobi Korea, formerly the Korean branch of global exchange HTX, recently announced the imminent closure of its services, citing a difficult “business environment.” The exchange posted an update on its website on Friday in which it revealed that it is shuttering its services on January 29, although withdrawals will still be permitted. Huobi Korea severed ties with HTX (formerly Huobi Global) last January, but recently introduced regulations have meant that the company has gone months without making the kinds of profits needed to survive.
Upgrade Fails to Spark Growth
Huobi Korea became its own venture in January 2023 to solidify its position as a domestic company and divorce itself from the global Huobi brand, but it seems that the past 12 months have ended the experiment. Despite the crypto market rebounding spectacularly in that time, the company has still been struggling to adapt to life without its parents, as a recent statement outlined (translated):
In order to provide a better virtual asset exchange service, the company has restricted the use of some services and has been carrying out brand renewal and system upgrades. However, considering the current business environment, the company’s position is that it will inevitably terminate the virtual asset exchange service.
Huobi Korea said that its trading facilities would be shuttered on January 29, although customers will still be able to withdraw their funds for the foreseeable future. The company added that it “cannot help but feel sorry and disappointed for our customers” and added that it looked forward to “meeting you again through the discovery of new blockchain business models and services.”
Huobi Korea’s closure follows similar announcements from smaller South Korean exchanges like Cashierest and Coinbit, which both closed last year, while another, CoreDAX, has suspended trading services, reportedly delaying wages for months.
Huobi Korea Suffered From Regulatory Changes
Stricter regulations in South Korea, many of which were introduced after a 2021 amendment to the financial reporting law, demand that exchanges maintain a partnership with a local bank for fiat-to-crypto services. The partnered banks issue real-name deposit and withdrawal accounts to mitigate money laundering and price manipulation risks.
According to a recent Financial Services Commission (FSC) report, Huobi Korea has no bank account and only met minimal information security requirements, leading to the FSC restricting it to crypto-to-crypto trades, a move that led to it generating zero revenue from crypto transaction fees in the first half of 2023.
South Korea is set to enact the “Virtual Asset Investor Protection Act” in July, imposing additional responsibilities on exchanges for safeguarding user funds. These include maintaining 80% of user funds in a cold wallet and registering insurance to ensure compensation in case of hacks or system failures
