South Korea’s crypto exchange closures lock $13M in investor assets

Impact of Exchange Closures on South Korean Crypto Investors

In South Korea, over 33,000 cryptocurrency investors, totalling approximately $13 million, are currently unable to access their funds. This issue has arisen due to the shutdown of multiple crypto exchanges, as reported by The Korea Times on October 14.

Exchange Shutdowns and Regulatory Pressure

14 virtual asset exchanges have either closed down or temporarily halted operations in the country. This action comes in response to the Virtual Asset User Protection Act, which has caused around 17.8 billion won ($12.8 million) in digital assets to remain inaccessible on these platforms.

Data from Recent Reports

This predicament is highlighted in data shared by Representative Kang Min-Kuk from the ruling People Power Party. It is reported that 33,906 South Korean investors are trying to retrieve their assets. In total, 11 exchanges have shut down, and three have paused their services.

Before ceasing operations, these exchanges held a combined 17.8 billion won in customer assets, consisting of 1.41 billion won in cash and 16.4 billion won in virtual currencies.

Significant Exchange Holdings

Among the closed exchanges, Cashierest, which ended operations in 2023, held the largest portion of customer assets, amounting to 13 billion won ($9.4 million). Following it are ProBit and Huobi, with assets valued at 2.25 billion won ($1.6 million) and 579 million won ($419,000), respectively.

Temporary Suspensions and Potential Impacts

Additionally, around 30.7 billion won ($22 million) is immobilized on platforms that have temporarily stopped their services. This scenario may lead to a rise in customers with frozen assets, although the full impact is yet to be determined.

Some of the affected platforms include Oasis, with 16.2 billion won ($11.7 million), Flata with 14.35 billion won ($10.3 million), and Btrade with 80 million won ($57,962).

Regulatory Challenges and Future Outlook

Representative Kang has indicated that ongoing efforts for regulatory compliance could increase the number of affected exchanges. He mentioned that with the virtual asset market experiencing a downturn and rising compliance costs, more exchanges might either cease or pause their operations during the Financial Services Commission’s renewal review process.