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South Korea’s cryptocurrency industry hit by wave of shutdowns and suspensions
Coinbit was shut down in December 2023.
The cryptocurrency landscape in South Korea has undergone significant upheaval, with ten virtual asset firms shutting down or suspending operations since the second half of last year due to deteriorating business conditions. This development was highlighted following a joint inspection conducted by the Financial Intelligence Unit (FIU) and the Financial Supervisory Service (FSS) from 20 to 23 October.
As of June 6, it was revealed that seven businesses had declared their intention to close, while three were in the process of suspending operations. Companies that have officially closed include Coinbit, Cashierest, Huobi Korea, Probit, Ten&Ten, Hanbitco and Coin&Coin. Meanwhile, Oasis, Bitrade and Bitcmon have suspended their operations, with Bitcmon partially resuming services after the inspection.
The closures and suspensions are largely attributed to firms’ failure to comply with recommendations on protecting virtual asset users issued by the FIU in November last year. In particular, two companies did not establish procedures to manage business closures and two others had inadequate procedures. Furthermore, six companies did not announce the closure on their websites a month in advance, and one company closed in March last year without any warning.
Most companies said they had created dedicated channels for returning users’ goods, but there were delays as only 1-2 employees remained, including the CEO. Six companies provided individual notifications via phone, SMS, or email, but one company did not use SMS, and three companies only notified users with assets exceeding 1 million won.
Companies that have suspended operations have cited reasons such as preparing to open a Tether (USDT) market, improving website service manuals, or improving user convenience. Financial authorities stressed that virtual asset companies must use all available media to notify users of the business closure, including detailed information on the closure date, asset withdrawal methods, withdrawal fees and valid contact information.
“Businesses operating in the virtual asset industry must use all available means to notify users of the business closure, including detailed information on the closure date, asset withdrawal methods, withdrawal fees and valid contact information,” said a representative of the financial authorities.
Users are advised to check the operational status and any unreturned goods of the companies they have traded with and to request the return of the goods according to the collection procedures of the companies that have closed. If illegal activities such as unauthorized use of users’ assets are suspected, users can report them to the FIU or the Financial Supervision Service.
Financial authorities will strictly examine renewal requests from businesses that have caused harm to users due to closure or suspension of operations after the second half of this year. This rigorous review process aims to ensure that companies adhere to regulatory standards and effectively protect user assets.
The cryptocurrency market in South Korea has been subject to rigorous regulatory scrutiny, especially following previous incidents of fraud and hacking. The FIU and FSS have been vigilant in ensuring that businesses comply with financial regulations to protect users. However, economic conditions and market volatility have posed significant challenges to these businesses, leading to the current wave of closures and suspensions.