Litecoin’s Privacy Upgrade Raises Concerns from Korean Crypto Exchanges

Last updated: May 24, 2022
2 Min Read
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Litecoin’s privacy-centric Mimblewimble upgrade has crypto exchanges in Korea worried about how to accommodate LTC holders in a compliant manner.

Mimblewimble, which was pushed through a Litecoin Improvement Proposal in 2019, is a protocol that allows users to opt-in to confidential transactions as long as their wallet or exchange supports it.

Bithumb, ranked as the number 20 crypto exchange on CoinMarketCap in terms of volume, issued a warning in regards to the Mimblewimble upgrade.

The Korean exchange cited the country’s local know-your-customer (KYC) and anti-money laundering (AML) laws in the announcement, namely its “Specific Financial Information Act”, which took effect on March 25, 2021.

“The revised Specific Financial Information Act stipulates that virtual asset service providers (VASPs) are obliged to efficiently prevent money laundering and public threatening activities as legal and institutional devices to prevent the risk of money laundering and public threatening through anonymous digital asset transactions,” Bithumb said.

“Bithumb decides to designate [Litecoin] as investment warning assets, and will make the final decision on whether to end the transaction support.”

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Upbit, another Korean-based exchange, released a similar statement.

Korea is known for having stricter laws on cryptocurrencies, particularly when it comes to privacy and anonymity. In 2020, privacy coins like Monero (XMR), Zcash (ZCASH) and DASH were banned from being sold on exchanges.

The country’s The Financial Services Commission (FSC) refers to privacy coins as “dark coins,” and banned them with the justification that they are predominantly used for ransomware attacks and money laundering.

The Litecoin Network achieved 75% consensus for Mimblewimble on May 2nd.

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