Korean Exchange Shuts Down as Regulators Crack Down on Its Cryptocurrency Fund
Cryptocurrency exchange Zeniex has announced that it is terminating all services after South Korea’s financial authorities started cracking down on unauthorized crypto funds. The exchange is asking its customers to withdraw their cryptocurrencies before the end-of-service date.
Terminating Services and Fund
Zeniex, an exchange launched in May, announced on Friday the termination of all services. The decision follows the investigation by South Korean financial authorities of the exchange’s cryptocurrency fund called Zxg Crypto Fund No. 1 (ZXG). Zeniex elaborated:
With recent issues regarding ZXG, we have gone through great deliberation both internally and externally. As a result, we have come to the conclusion that continuing to operate such service will be difficult. It is with much regret to announce that all services of Zeniex will be terminated on November 23, 2018.
The exchange proceeded to inform its users that “All crypto assets except ZXG must be withdrawn before the end of service date,” adding that on Nov. 23 users will no longer be able to check their crypto assets held at the exchange.
In addition, the exchange announced the termination of Zxg Crypto Fund No. 1 which stopped trading on Nov. 9. The exchange and its partner, Genesis Capital, will return investors’ funds in ETH on Nov. 12, according to the announcement.
Noting that the fund “was expected to be listed on crypto exchanges overseas,” the exchange admitted:
With recent developing issues we believe that ZXG Crypto Fund No. 1 will have difficulties to operate smoothly with such current pressure from the financial authorities.
Trouble With Regulators
News.Bitcoin.com recently reported that the South Korean financial regulators are cracking down on unauthorized cryptocurrency funds.
Zxg Crypto Fund No. 1, launched in September, became the center of the regulators’ focus as it is “the first virtual currency fund in Korea,” Business Korea wrote.
The government believes that the fund is in violation of the country’s Capital Markets Act and has initiated an investigation of the fund and the company. Zeniex had planned to launch a second crypto fund but canceled its plans after the regulators’ probe.
The country’s Financial Services Commission (FSC) was quoted by Newsis as saying:
The virtual currency fund is likely to be in violation of the capital markets law and the company is not an investment company accredited by the financial authorities.
Business Korea noted that Zeniex’s fund has never been registered with the Financial Supervisory Service, adding that its affiliated companies have not been approved by the FSC.