97% of Korean exchanges risk going bankrupt

[gentlemand]

https://www.zerohedge.com/crypto/crypto-nightmare-97-south-korean-exchanges-are-risk-going-bankrupt

First off I didn't think there were enough Korean exchanges to be able to have 97% of them go bust. Second off I've no idea how believable Zero Hedge is.

But this would not surprise me all that much. I got the impression that the Korean government were amateurish pricks caught by surprise when it all blew up. I got the impression most exchanges there are run by clueless scum. I also got the impression Koreans themselves were pretty fucking dim and would pump a turd with a cocktail stick poking out of it.

I don't expect any effect as it's a closed market and it's already faded away but I expect it'll be the highest profile example of a bubble burst. See ya.

[1Referee]

South Korean are top wash trading exchanges. I think it's damn safe to say that the lion share of these wash trading exchanges going down is a good thing for the ecosystem. Another aspect making these South Korean exchanges suck hard is that some exotic shitcoins generate 100x more volume than Bitcoin....... Good riddance!

It might even bring Bitcoin closer to an ETF with how wash trading on overseas exchanges is a heavy weighing concern for the SEC, and I can totally understand them here.

[Docnaster]

You are a bit late to the party. This is old news by now and someone even suggested that most of the exchanges that are shutting down this year have a secret Korean origin. Wild conspiracy theories and all you see.

I think the open nature of Bitcoin, as in its open source code base, actually called for something like this where numerous shit coins were inevitable, and behind them, numerous exchanges. Eventually it should adjust down to a small-ish number of platforms what people can pay for. Once this space becomes regulated. Starting an exchange would become a lot more difficult. In turn giving the existing or surviving exchanges some monetary relief as they would have more and more customers.

[figmentofmyass]

One reason for the souring conditions of domestic exchanges is that hundreds of smaller ones cannot open real-name virtual accounts, which means, traders cannot convert digital assets into fiat, or won.

The country's four largest exchanges, Upbit, Bithumb, Coinone, and Korbit, allow traders to swap digital assets for fiat. Still, traders have to use their legal name on the account as part of Anti-Money Laundering regulations enacted in 1Q18. Crypto traders tell BusinessKorea that investors cannot benefit from anonymity, one of the fundamental characteristics of cryptos, so many have shied away from the major exchanges in the country.

^^ pretty dubious analysis. you can't trade anonymously on domestic exchanges in the USA either. are american exchanges on the verge of collapsing left and right?

As per strict regulations, crypto traders have said, transaction volumes on domestic exchanges have collapsed. Only five South Korean exchanges rank in the world's top 100 exchanges in terms of transaction volume.

BusinessKorea warned: "It is no exaggeration to say that 97 percent of domestic exchanges are in danger of going bankrupt due to their low volume of transactions."

the whole exchange sector is totally over-saturated, not just korea. 9 out of 10 exchanges probably should shut down. volume probably collapsed in this case because korean exchanges had to stamp out wash trading under regulator scrutiny.

[Pearls Before Swine]

Second off I've no idea how believable Zero Hedge is.

Not very in my humble opinion, and I've read many an article from them.  They're basically fear mongers writing about the great financial collapse that never seems to come, and that we should all buy as much gold and silver as we can, and oh yeah 'CRASH JP MORGAN'.

That doesn't mean what they wrote about the Korean exchanges isn't true, tho.

I got the impression most exchanges there are run by clueless scum. I also got the impression Koreans themselves were pretty fucking dim and would pump a turd with a cocktail stick poking out of it.

Ha ha!  I would not argue with that trenchant analysis, my brother.  But I would also posit that most exchanges which aren't regulated are being run by 'clueless scum' just like most of the crypto casinos out there.  Koreans don't have a monopoly on idiocy, you know.

[stompix]

One reason for the souring conditions of domestic exchanges is that hundreds of smaller ones cannot open real-name virtual accounts, which means, traders cannot convert digital assets into fiat, or won.

The country's four largest exchanges, Upbit, Bithumb, Coinone, and Korbit, allow traders to swap digital assets for fiat. Still, traders have to use their legal name on the account as part of Anti-Money Laundering regulations enacted in 1Q18. Crypto traders tell BusinessKorea that investors cannot benefit from anonymity, one of the fundamental characteristics of cryptos, so many have shied away from the major exchanges in the country.

^^ pretty dubious analysis. you can't trade anonymously on domestic exchanges in the USA either. are american exchanges on the verge of collapsing left and right?

Indeed, what the f word?
So they flee from the SK exchanges to.....what?
Ok, no KYC on some Congo based exchange, how are you sending money or withdrawing money because no matter what you do one side will be fiat. Though...a bank, that has all your details already.
It's like trying to purchase anonymously a pizza and have it delivered at your doorstep.

Now:

BusinessKorea warned: "It is no exaggeration to say that 97 percent of domestic exchanges are in danger of going bankrupt due to their low volume of transactions."

Upbit $91,687,322 USD per day
Bithumb $323,599,326 USD
Coinone $26,331,255 USD
Korbit $4,365,209 USD

If that means bankruptcy...how are bitstamp and bitfinex doing?
Not even talking about smaller exchanges in Europe.

The real problem is that the whole volume is fake. Probably they only have 1% of it and now they realized they fucked up pretty bad as they are becoming targets of investigations and probably some people have started asking some really interesting questions.
You make 0.1 %, let's say, of 300million$ in fees daily yet at the end of the year your revenue is a hundred $?

Why all big exchanges (on paper) flee the country immediately as the authorities start to investigate?

[hugeblack]

I am not sure of the accuracy of these numbers, but I think this percentage is exaggerated or inaccurate.
There is a lot of manipulation that took place from these platforms at the end of 2017 and the boom of BTC where the difference was more than $ 1000 at times up to $ 2000.
So these platforms are likely to faking trading volumes and can be said to be on the verge of bankruptcy.
The bubble burst will not have a fatal effect. Perhaps we would return to $ 4,000 levels at the worse case.

[LeGaulois]

Do you know Darwin's theory?

There were a lot of exchanges that opened suddenly. As of today, there are over 200 exchanges but all these small exchanges can not get 'real-name virtual accounts' and have low volumes. So let's say due to the lack of features people aren't interested in.

Only the best survive, not only in this country, it's available worldwide. In this industry, if a company is not able to adapt and follow the trends the game will be over soon or later. Wash trading can be seen in a lot of 'shit exchanges' and since there are a lot of there... it's obvious to find a lot of WT...

[malevolent]

You make 0.1 %, let's say, of 300million$ in fees daily yet at the end of the year your revenue is a hundred $?

Hacks and 'hacks' are also something to consider.

Why all big exchanges (on paper) flee the country immediately as the authorities start to investigate?

They have nothing to gain by staying, and nothing to lose by resuming their business in a friendlier jurisdiction.

[dothebeats]

I would not be surprised if this turns out to be true. A huge portion of the Korean market is literally just them for themselves and are not open to foreign traders and players. The amount of wash trading happening within these markets are insanely high as well, affecting even the most obscure names in the cryptocurrency markets. And of course, some operators may have gauge the market incorrectly and pushed through with their platform anyway, causing what's happening right now.