South Korean Crackdown

South Korea’s financial regulator decided the prohibition of participation in initial coin offerings (ICOs) for domestic companies and startups.

The Financial Services Commission, following the example of China, announced yesterday that all forms of cryptocurrency-based money raising activity would be banned. It justified that expressing its grave concern about the fact that crypto market funds have entered a non-productive speculative orientation. Also, token offerings constitute a “violation of the capital market law.” According to FSC, this banning will be “intensive” using “stern penalties,” on-site inspections (from September), and analysis of virtual currency accounts for user data (from December). Lastly, FSC intends to examine cryptocurrency companies’ operations to locate any unfair terms or conditions such as arbitrary withdrawal restrictions. The regulator also announced curbs to margin trading in crypto space, where platforms allow people to trade digital coins using borrowed funds. Lastly, FSC announced a series of recent arrests and closure of companies that merchandized fake cryptocurrencies with 25 KRW earnings from around 1.000 deceived investors. Such fraudulent activities lad to the creation of a new “Virtual Currency Detention Center.”

The regulator pointed to similar actions from US, Chinese, and Singaporean regulators to limit the elusive and “escaping” market.

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