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70% of defunct cryptocurrency exchanges fail to return customers' money

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By Yi Whan-woo

Seven out of 10 cryptocurrency exchanges in Korea fail to return investors' money when they shut down or suspend operations, according to financial authorities, Friday.

The Financial Supervisory Service (FSS) and Korea Financial Intelligence Unit said in a joint research project that seven of the 10 exchanges where digital assets were bought and sold did not return customers' money fully after they went defunct.

Of the seven, six did not even notify customers in advance about their plans to shut down or suspend business.

"And even if they did, just one or two employees were tasked with giving back the customers' money, causing extreme inconvenience for customers," the FSS said.

The finding comes as Korea is estimated to be the third-biggest cryptocurrency market in the world.

Accordingly, more than 6 million Koreans — over 10 percent of the country's entire population — participated in the crypto market via registered exchanges in the first half of 2023.

They also tend to trade smaller, riskier cryptocurrencies, in addition to major ones such as Bitcoin.

For customer protection, the FSS said it will closely work with other financial authorities to enhance rules on financial firms that plan to close down.

"We come up with relevant guidelines, and will continue to focus on rooting out illicit activities in the growing digital asset market," the FSS said.

It called on the CEOs of digital asset service providers to ensure strict compliance with the virtual asset investor protection law, which is set to take effect by July.

Yi Whan-woo


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