Report: 70% of South Korean Crypto Exchanges Do Not Return Funds to Clients When Closing
Date: 2024-06-10 Author: Henry Casey Categories: IN WORLD
South Korean regulators, including the Financial Supervisory Service (FSS) and the Financial Intelligence Unit (FIU), conducted a study to assess the likelihood of assets being returned to customers when local cryptocurrency exchanges close or suspend payouts. The study showed that in 70% of cases, users do not receive their funds back.
Investigating Problematic Exchanges
Analysts examined the history of ten cryptocurrency companies that either officially closed or suspended operations. The results showed that only three of these exchanges returned funds to their clients. The remaining seven companies either did not refund users' money at all or provided only minor compensation.
Another problem was that six cryptocurrency companies did not notify their clients of the upcoming closure or suspension of operations. FSS noted that even in cases where funds were returned, only one or two employees were entrusted with this, which caused significant inconvenience for users.
Importance of the Cryptocurrency Market in South Korea
South Korea is considered the third largest digital asset market in the world. According to authorities, more than 10% of the country's population engages in cryptocurrency transactions through registered exchanges. This emphasizes the importance of creating a reliable system for protecting user rights and strict regulatory requirements for the activities of crypto exchanges.
Development of Recommendations
FSS representatives said they are developing recommendations to tighten regulations for companies in the cryptocurrency industry. In their opinion, the growing demand for the services of cryptocurrency platforms requires the creation of a specialized regulatory framework that will help protect the interests of users and prevent illegal activities.
The FSS continues to focus on regulating the growing digital asset market. They emphasize the need to eradicate illegal activities and create conditions for the safe and transparent functioning of cryptocurrency exchanges.
Regulatory Perspectives
In light of the current situation, South Korean authorities are seeking to review and improve regulation of the cryptocurrency market. This includes not only tightening rules for exchanges, but also considering the creation of new financial instruments such as cryptocurrency ETFs.
The FSS and FIU study revealed serious problems in the operation of South Korean cryptocurrency exchanges. Most companies do not refund customers upon closure, highlighting the need for strict regulation and protection of user rights. Authorities are working to create a regulatory framework that will ensure security and transparency in the growing digital asset market.
