The Korea Financial Intelligence Unit (KoFIU), which is South Korea’s authority on financial matters, has opened an investigation into cryptocurrency exchanges regarding the list of its own internally issued tokens, according to a report. report from a local media.
The government agency took note of the fact that native cryptocurrencies are the most prominent cause that led to the shutdown of a large number of cryptocurrency exchanges and platforms in 2022.
The investigation was triggered by the collapse of the cryptocurrency exchange FTX, which operated in the United States but had to file for bankruptcy on November 11 due to a mass exodus of consumers due to concerns about the stock market’s ability to maintain its capitalization. Concerns about whether or not FTX has an adequate amount of capital have contributed to the growth of these anxieties.
An FSC spokeswoman told Yonhap on Sunday that local exchanges are not allowed to issue their own currencies. This information was provided to Yonhap by the FSC. The first investigation was carried out by the financial authorities, but they still want to look into more precise facts because there are still questions about the quotation of the local currency.
In accordance with the Law on Reporting and Use of Specified Financial Transaction Information, local cryptocurrency exchanges are prohibited from listing native coins and it is also prohibited to sell, exchange or trade in transactions involving coins listed by people associated with the exchange.
According to the Yonhap article, one of the cryptocurrency exchanges under investigation is the Flata Exchange, located in Daegu. There are more and more indications that Flat, a currency that was mentioned in January 2020, could really be a local coin.
Financial authorities have verified that the five largest cryptocurrency exchanges, including Upbit and Bithumb, have not launched their own native currencies. However, the authorities have not yet completed their investigations into the less significant exchanges.
Early reviews indicated that every cryptocurrency exchange operating in South Korea complied with all applicable laws and regulations. On the other hand, a spokeswoman for the Financial Services Commission (FSC) said that further investigation is planned as internal token listings continue to raise some questions.
Korean investors lost money with FTX
According to estimates provided by the regional press, there are about 6,000 Korean investors in FTT, and their holdings total 110,000 units. According to Similarweb, Korean users were responsible for 6% of FTX’s internet traffic in the month of October, making it the second largest contributor behind Japan.
In a Nov. 16 meeting with KoFIU, the CEOs of the top five cryptocurrency exchanges said an event like the one that happened with FTX is very unlikely to happen in Korea at the result of the act. They went on to say that the underlying cause of FTX’s collapse was a consequence of management’s misuse of client assets as well as abuse of its native token, FTT.
The number of cryptocurrency exchanges and other crypto-related businesses in South Korea is growing. However, the existing method of accounting offers no choice to companies that hold cryptocurrency holdings. The Financial Surveillance Service (FSS) said it has developed a strategy to help account for virtual currencies.
Companies will be required to provide information on crypto issuances and token sales due to the new requirements. When companies are required to publish financial statements, they will be subject to the obligation to disclose the tokens they now own.