Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
Virtual asset exchange shutdowns result in over $12.8 mil. in customer investment losses
gettyimagesbank
By Lee Yeon-woo
More closures expected amid rising compliance costs and industry slump
Multiple virtual asset exchanges shut down with the enforcement of the Virtual Asset User Protection Act this year, leaving behind 17.8 billion won ($12.8 million) in investment assets for customers to reclaim.
According to data from the Financial Services Commission (FSC), as of Sept. 20, 11 virtual asset exchanges in Korea had ceased operations, while three temporarily suspended their services.
The data was released by Rep. Kang Min-kuk of the ruling People Power Party on Thursday.
A total of 33,906 subscribers are eligible to claim cashable and virtual assets from the closed exchanges. The total value of investment assets held by these exchanges amounts to 17.8 billion won, consisting of 1.41 billion won in cashable assets and 16.4 billion won in virtual assets.
Cashierest held the largest number of customer assets, totaling 13 billion won. It was followed by ProBit with 2.25 billion won and Huobi with 579 million won.
Additionally, about 30.7 billion won remain tied up with three virtual asset exchanges that have temporarily suspended operations, indicating that the number of subscribers unable to recover their investments could grow further. The exchanges are Oasis, with 16.2 billion won, Flata Exchange, with 14.35 billion won, and Btrade, with 80 million won.
"With the virtual asset market in a slump and regulatory compliance costs on the rise, more exchanges are likely to cease or suspend operations during the ongoing renewal review process by the FSC," Kang said.
Financial authorities have issued guidelines to help ensure the return of user assets held by closed virtual asset businesses. Digital Asset eXchange Alliance, an alliance of Korea's five largest crypto exchanges, also established the Digital Asset Protection Foundation on Sept. 30 to support the smooth return of these assets.
However, fully returning all remaining user assets through the foundation may prove challenging.
Kang said, "The FSC should closely monitor businesses that may shut down or suspend operations during the renewal review process to prevent cascading losses for investors."