The Korean government and local financial authorities have issued warnings to investors about the emergence of false cryptocurrency exchanges.
Fraudulent exchange
On December 13, the Korean government and its cryptocurrency working group consisting of the Korea Ministry of Strategy and Finance, the Financial Services Commission, the Ministry of Justice, the Fair Trade Commission and the Financial Supervisory Commission held an emergency meeting to discuss the situation of the Korean cryptocurrency market. And supervision of related companies and investors.
The Korean government drafted four regulations at this emergency meeting, two of which are:
1. Foreigners and underage investors are not allowed to trade cryptocurrencies
2. Appropriate supervision of cryptocurrency exchanges as legitimate financial service providers
In view of the rapid increase in the number of fraudulent cryptocurrency exchanges, platforms and activities, the Korean government urgently needs to regulate cryptocurrency exchanges to combat fraud.
Last week, several fake cryptocurrency exchanges were exposed by local Bitcoin communities and financial institutions, one of which was the name BitKRX that mimicked the Korea Stock Exchange (KRX).
South Korean government expresses concern about fraud in bitcoin market
The BitKRX exchange claims to be a branch of KRX, boasting that its own company is a regulated and legitimate company founded by KRX to attract users to its platform.
According to North Korea Daily, one of South Korea's largest mainstream media, South Korean financial institutions and law enforcement agencies have begun to crack down on cryptocurrency exchanges that deceive the market and conduct fraudulent activities. Local financial institutions said that there are several cryptocurrency exchanges in South Korea that are clearly outside the scope of supervision, but they use the brands of some well-known financial institutions and call themselves legitimate enterprises. This is the case with BitKRX.
A member of the Korean Bitcoin community told the Chosun Ilbo:
“Some people with qualifications and experience are not enough to operate high-traffic and large platforms are operating cryptocurrency exchanges in the Korean market. Therefore, traders cannot execute sales orders in time, causing significant losses and difficulties for investors. South Korea’s strict supervision of the market Will further stabilize the local cryptocurrency market."
Welcome supervision
Earlier this week, Bithumb, Korea's largest cryptocurrency exchange, said a series of appropriate regulations for cryptocurrency companies and investors would be able to nurture the market and boost its exponential growth. Bithumb said it would welcome this regulation.
For cryptocurrency exchanges such as Bithumb, Korbit and Coinone that process billions of dollars a day, regulation is necessary because a significant portion of investors in the Korean cryptocurrency market are becoming Ponzi schemes and fraudulent activities. The victim.
This month, local law enforcement agencies cracked a $200 million cryptocurrency Ponzi scheme. The South Korean police arrested 14 members of the cloud-mining Ponzi scheme called "MiningMax" on various charges including economic crimes and fraud.
According to CryptoCompare, a cryptocurrency market data provider, the Korean cryptocurrency market accounts for only 4.6% of the global cryptocurrency market, behind the US, Japan and Europe.
If investors trade cryptocurrencies directly on regulated platforms and exchanges, this relatively small market will be able to avoid similar Ponzi schemes.
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