South Korea Cracks Down on Unauthorized Cryptocurrency Funds
South Korean financial authorities are cracking down on unauthorized cryptocurrency funds. Specifically, one crypto fund launched with a local exchange is allegedly being investigated. The exchange claims no wrongdoing because its token actions were performed abroad, but has promptly surrendered its plan to establish another fund.
South Korea’s Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) have cautioned investors of unauthorized cryptocurrency funds. The warning followed the launching of a financial product in which”cryptocurrencies gathered from a few investors are handled through initial coin offerings (ICO), and profits have been distributed in their expiration dates,” Business Korea clarified.
The authorities specifically called this finance started last month from crypto exchange Zeniex called”ZXG Crypto Fund No. 1,” that is”the initial virtual currency finance in Korea,” the book comprehensive, noting:
The virtual currency fund has never been registered with the Financial Supervisory Service … None of the management company, sales company and the trustee have been approved by the Financial Services Commission.
Maeil company newspaper reported on Tuesday that”The financial authorities have handed over the circumstantial information for the analysis into the prosecution”
Zeniex clarified that while funding was made through its platform,”the actual recruitment and token issuance were made by foreign management companies,” the information outlet conveyed. Noting that less than 1 billion won ($878,080) was increased, the organization considers that there was no reporting responsibility. An official of this exchange was quoted claiming:
An indirect investment in a virtual currency fund is an attractive tool to raise market soundness … It’s unfortunate that innovative attempts will not continue until the government’s guidelines are set.
The South Korean authorities prohibited ICOs in September last year but has yet to present guidelines to them. A range of proposals are submitted to the National Assembly and the government is expected to announce its ICO position in November.