News
70% of dead Korean trades leave investors high and dry
Investors in South Korea’s booming cryptocurrency market are facing a digital dust storm after a shocking revelation from financial regulators. A joint study by the Financial Supervisory Service (FSS) and the Korea Financial Intelligence Unit (FIU) found that a staggering 70% of closed cryptocurrency exchanges left their customers hanging, failing to return invested funds.
The hidden risks of lesser-known coins
This news comes as a gut punch to over 6 million Koreans, around 10% of the population, who have dived into the cryptocurrency pool. Unlike their global counterparts, Korean investors are known to dabble in riskier, lesser-known cryptocurrencies beyond established names like Bitcoin.
The report paints a grim picture of industry practices. Many of these defunct exchanges didn’t even bother to notify users before pulling the plug, leaving them scrambling to save their investments. Even in cases where some form of notification was issued, the recall process was described as an “extreme inconvenience” with a skeleton crew tasked with dealing with a potentially huge number of claims.
See more
Seven out of 10 cryptocurrency exchanges in Korea fail to return investors’ money when they close or suspend operations, financial authorities said on Friday. (Korea Time) https://t.co/ws2wtzd2qu
— Financial Services Commission – FSC Korea (@FSC_Korea) June 7, 2024
Severe warning to CEOs
The FSS is working to strengthen confidence in the digital asset market. They pledged to work closely with other financial supervisory bodies to develop stricter regulations for the closure of financial companies, especially cryptocurrency exchanges. They also issued a stern warning to CEOs of digital asset service providers, reminding them to comply with the upcoming Virtual Asset Investor Protection Law, which comes into force in July.
While the potential for high returns is undeniable, the risks associated with a largely unregulated market are becoming increasingly apparent. As the FSS struggles to create a regulatory lasso, Korean cryptocurrency investors would do well to proceed with caution, lest they risk getting caught in the next digital leak.
Police arrest South Korean scammers
Adding to the chaos, South Korean law enforcement recently arrested 19 people linked to a deceptive operation “cryptocurrency reading room” scam that defrauded over 300 investors of $19 million. Operating on platforms such as Telegram, the gang posed as cryptocurrency experts to lure victims with promising tips and fake sponsorships.
They used fake apps linked to bogus exchanges, luring victims with initial earnings before imposing fabricated “withdrawal fees” and cutting off communication. The investigation also uncovered a disturbing recruitment tactic called “pig slaughter,” in which victims were promised jobs in Myanmar but were forced to undertake a fraudulent operation upon arrival.
Featured image from Korea Herald, chart by TradingView