NY Regulator-Flagged ‘North Korean Crypto Accounts’ Were South Korean: Bittrex

April 23, 2019 05:53 UTC

By CCN.com: Four days after New York State Department of Financial Services’ executive deputy superintendent for banking Shirin Emami disclosed in an op-ed that having North Korean users on its platform was part of the reason Bittrex was denied a virtual currency business license, the cryptocurrency exchange has come out forcefully to deny the claim.

According to Bittrex, there are no North Korean users on its platform. After the allegation was made by Emami, Bittrex says it reviewed the aforementioned accounts and now has an explanation – they were South Koreans not North Koreans.

Per a statement from the cryptocurrency exchange, South Korean users had erroneously picked the rogue state as their country:

After reviewing the two alleged accounts provided to us on Thursday, we informed NYDFS that Bittrex had previously investigated these users in Oct. 2017. South Korean residents mistakenly selected North Korea in our country dropdown menu, but we determined through country identification, physical and IP addresses that ALL were from South Korea.

Is Bittrex Deliberately Staying Mum on NYDFS’ Claim That ‘More May Exist’?

In her article carried by CoinDesk, Emami had noted that the two North Korean accounts were flagged earlier this year. Additionally, Emami had noted that it was just a small sample and ‘more may exist’. In its brief statement, Bittrex did not address whether it investigated other accounts to determine the existence of others.

Emami had also pointed out that at least two accounts from Iran, another heavily sanctioned country, had also been identified. These accounts were still active this year according to examiners from the NYDFS. Bittrex was also silent on this allegation.

Bye Bye, Big Apple

The public exchange between Bittrex and NYDFS follows the move by the regulator to deny the cryptocurrency exchange a BitLicense. On April 10, the NYDFS notified Bittrex that a virtual currency business license application filed four years ago had failed. Additionally, a money transmission license application was also denied.

Per the NYDFS, Bittrex failed to ‘demonstrate that it will conduct its business honestly, fairly, equitably, carefully and efficiently’. The NYDFS went on to cite several deficiencies that existed in Bittrex’s business. This included the failure to exercise due diligence and control with regards to the exchange’s token and product launches. Bittrex also had deficiencies in meeting New York’s capital requirements.

Besides denying the exchange a license, Bittrex also had to stop its operations in the Big Apple. While awaiting the license Bittrex had been operating in New York under ‘safe horbor’ terms. These terms allow an exchange to do business as a license application is being processed.

Bittrex’s Parting Gift to New York Residents

To soften the blow for its New York users, the cryptocurrency exchange waived trading fees for residents of the state. This allowed them to exit positions at no cost.

The denial of a BitLicense must have been particularly stinging for Bittrex. The day prior, Bitstamp USA Inc, the U.S. subsidiary of Europe’s crypto exchange, Bitstamp Ltd, had just received its BitLicense.

Bitstamp had applied for the virtual currency business license at just about the same time as Bittrex.

Last modified: April 23, 2019 05:54 UTC

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After words, numbers are my other love... mostly when they are going up and they have nothing to do with taxes or expenses. That makes green my favorite color! Currently a resident of Nairobi, Kenya. Follow me on Twitter @cointributor or email kointributor[at]gmail.com