Financial regulators in South Korea revealed that 70% of defunct cryptocurrency exchanges in the country did not return investors’ funds, leaving many in a precarious position.
The Risks of Lesser-Known Cryptocurrencies
With over 6 million Korean investors engaging in cryptocurrencies, including riskier options besides popular ones like Bitcoin, the recent findings shed light on the challenges faced by consumers.
Many closed exchanges did not notify users before shutting down, leading to chaos as customers scrambled to recover their investments. The withdrawal process was described as cumbersome, with limited staff handling numerous claims.
Authorities Issue Strong Warnings
The Financial Supervisory Service (FSS) aims to restore trust in the digital asset market by collaborating with other regulators to enforce stricter rules for closing financial businesses, particularly crypto exchanges. CEOs of digital asset service providers have been warned to comply with the upcoming Virtual Asset Investor Protection Law.
While the allure of high returns is enticing, the risks of an unregulated market are becoming more evident. As regulations are being refined, Korean crypto investors are advised to proceed cautiously to avoid falling victim to potential pitfalls.
Authorities Crack Down on Crypto Scammers
Law enforcement in South Korea arrested 19 individuals linked to a fraudulent “crypto reading room” scheme that swindled over 300 investors out of $19 million. The scammers posed as experts, luring victims with false promises and using fake apps associated with illegitimate exchanges to deceive them. Victims were misled with purported gains only to face exorbitant fees and subsequent communication cutoffs.
Further investigations uncovered a disturbing recruitment method known as “pig-butchering,” where individuals were falsely offered jobs in Myanmar but coerced into the fraudulent operation upon arrival.
Featured image from The Korea Herald, chart from TradingView
