South Korea’s Crypto Exchange Closures Leave $12.8M in Limbo for Customers

Crypto Reporter

Shalini Nagarajan

Crypto Reporter

Shalini Nagarajan

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Shalini is a crypto reporter who provides in-depth reports on daily developments and regulatory shifts in the cryptocurrency sector.

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Last updated:

October 24, 2024 06:24 EDT

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South Korea’s Virtual Asset User Protection Act has prompted several virtual asset exchanges to shut down this year. This leaves customers with up to $12.8m in stranded investments, now available for reclamation.

Eleven virtual asset exchanges in Korea have stopped operations, while three others have temporarily suspended their services. Rep. Kang Min-kuk of the ruling People Power Party disclosed this data on Thursday, according to the Korea Times.

In July 2024, authorities introduced legislation regulating virtual assets to protect investors. This new law gives users tools to recover their assets if an exchange fails.

The law also created the Digital Asset User Protection Foundation, which manages asset recovery during exchange closures or collapses. Acting as a trustee, the Foundation simplifies the process, helping users avoid dealing with complex legal matters on their own.

Nearly 34,000 Crypto Investors Eligible to Reclaim $12.8M from Closed Exchanges

A total of 33,906 subscribers can now reclaim both cashable and virtual assets from the closed exchanges. Korea Times reported that these exchanges hold 17.8 billion won ($12.8m) in investment assets, including 1.41 billion won ($1.02m) in cashable assets and 16.4 billion ($11.8m) won in virtual assets.

Cashierest held the most customer assets, totaling 13 billion won ($9.4m). ProBit followed with 2.25 billion won ($1.63m) in assets, while Huobi managed 579 million won ($420k).

Additionally, around 30.7 billion won ($22.2m) remain inaccessible, locked in three crypto exchanges that have paused their services. This situation may increase the number of subscribers struggling to reclaim their investments. The exchanges include Oasis, holding 16.2 billion won ($11.7m), Flata Exchange, with 14.35 billion won ($10.4m) and Btrade with 80 million won $58k).

South Korea’s Regulatory Push May Force More Crypto Exchanges to Halt Operations

Kang anticipates that further exchanges will either shut down or halt operations as the Financial Services Commission (FSC) continues its renewal review process.

A series of cryptocurrency issues in recent years, including the alleged fraud involving South Korean crypto entrepreneur Do Kwon, raised concerns among regulators and the public. This drove the push for tighter regulation in the crypto markets.