The South Korean government and local financial authorities warned investors about the appearance of bogus cryptocurrency exchanges.
December 13, the South Korean government and its task force on cryptocurrency created by the Ministry of strategy and Finance, financial services Commission, the Ministry of justice, the fair trade Commission and the financial supervision Commission, held an emergency meeting to discuss the state of the cryptocurrency market in South Korea and the draft regulations for companies and investors.
Two of the four draft regulations of the South Korean government included:
The ban on trade in crypto-currencies for foreigners and minors investirovanie regulation of cryptocurrency exchanges as legitimate providers of financial services.
Given the rapid growth in the number of fraudulent cryptocurrency exchanges, platforms and activities, the South Korean government urgently has begun to regulate crypto-currency exchanges and the use of harsh measures against fraudulent transactions.
Last week the local Bitcoin community and financial authorities have exposed some bogus cryptocurrency exchanges. One of them was BitKRX named like exchange Korea Exchange (KRX), the largest financial trading platforms in South Korea, established KOSDAQ (Korean Association of securities market participants), the Korea futures exchange and Korean stock exchange.
Exchange BitKRX was positioned in the market as the KRX office, attracting users to your platform by advertising their activities as legitimate and regulated entity established by KRX.
Chosun, one of the largest South Korean media reported that the local financial and law enforcement agencies began the persecution of the crypto exchanges with deceptive marketing and fraudulent transactions. More precisely, the local financial authorities reported that several cryptocurrency exchanges in South Korea not regulated but operate as a legitimate company using brands to leading financial institutions as BitKRX.
One of the members of the South Korean Bitcoin community told Chosun:
“A small group of persons without sufficient skills and experience to operate large-scale platforms with high volume of traffic has launched a cryptocurrency exchange in the local market. As a result, traders are unable to appropriately fulfill orders for buying and selling in a timely manner, causing heavy losses and difficulties for investors. Strict regulation of the South Korean government to stabilize the local cryptocurrency market.”
Earlier this week, South Korean largest cryptocurrency exchange Bithumb (which is also the second largest trading platform in the global cryptocurrency market) stated that the correct set of regulations for companies and investors will contribute to the development of the cryptocurrency market and its significant growth. In Bithumb said:
“Proper regulations will facilitate the market development of virtual currencies, and we will support it.”
For such cryptocurrency exchanges as Bithumb, Korbit and Coinone who daily handle trading operations in the billions of dollars, regulations are necessary, since most investors in the cryptocurrency market of South Korea have become victims of financial pyramids and fraud.
This month, local law enforcement uncovered a pyramid scheme for $ 200 million associated with cryptocurrencies. 14 participants MiningMax, pyramid schemes for cloud mining, was arrested by South Korean police. They were indicted on several counts including economic crime and fraud.
According CryptoCompare, data provider crypto markets, the market of cryptocurrency exchanges South Korea 4.6 percent of the world market of cryptocurrency exchanges and going after the USA, Japan and Europe.
The financial pyramid on the $ 200 million for a relatively small market could have been avoided if the investors had carried out trading cryptocurrencies directly on regulated platforms and exchanges.