Major Crypto Shutdowns Amid New Regulations in South Korea
The Virtual Asset User Protection Act of 2024 saw South Korea take major steps to tighten up on cryptocurrency regulation, leading to the shutdown or suspension of over a dozen crypto exchanges in the country. It has left tens of thousands unable to access their funds, resulting in widespread concerns and financial uncertainty.
$13 Million in Unclaimed Assets
According to the FSC, it turned out that 11 exchanges had shut down their businesses for good, while another three temporarily suspended operations. As a result, close to 34,000 crypto holders were trying to get back a total of 17.8 billion won, both in cash and digital assets. Of this value, 1.41 billion won represents cashable assets, while the remaining value equates to 16.4 billion won tied in cryptocurrencies.
The Biggest Custodians of Unclaimed Funds
Among the shuttered exchanges, Cashierest is the largest holder of unclaimed funds by condition, with 13 billion won of customer assets on its books. By contrast, the next-largest holders are the exchanges ProBit and HTX, formerly known as Huobi, which hold 2.25 billion won and 579 million won, respectively. Combined, the three exchanges that have only temporarily shuttered operations- Oasis, Flata Exchange, and Btrade- hold 30.7 billion won. The largest holder among these three is Oasis, which hosts 16.2 billion won.
More Closures Anticipated
These current shutdowns may be just the tip of the iceberg. Rep. Kang Min-kuk of the majority People Power Party hinted that more platforms may be forced to shut down or suspend their operations as the FSC proceeds with its regular inspections of compliance. Kang also showed how the current downturn in the market, along with higher regulatory costs, can sum up to more shutdowns in the short term.
User Asset Recovery Faces Hitches
While there are guidelines in place from the South Korean authorities to help in the recovery process, that road is proving to be tough. The complicated legal landscape, coupled with strained finances of these exchanges, makes full recovery of the users’ funds an unlikely thing. As regulatory compliance goes on to become increasingly onerous, and with a continuing unstable crypto market, the state of user asset recovery still remains in doubt.
