The South Korean Exchange Zeniex will close its doors on November 23. This due to new regulatory pressure applied earlier this month by the government. The exchange also had the first Korean cryptocurrency fund under its sleeve and it will close operations too. The Financial Services Commission mentioned the fund as a non-compliant financial startup.
Korean Exchange Zeniex Closes Its Doors
The South Korean exchange Zeniex, a small cryptocurrency exchange, has announced yesterday that they will be stopping operations next November 23. In their official announcement, they explain the reasons that brought this decision. The announcement states:
“with recent issues regarding ZXG, we have gone through great deliberation both internal and externally. As a result, we have come to the conclusion that continuing to operate such service will be difficult.”
The Korean regulators recently called out this exchange because they hosted the first Korean cryptocurrency fund. The Financial Services Commission openly criticized the ZXG Crypto Fund 1 because of its non-compliance with local registry regulations. According to them, the fund proposal should have been registered and they failed to do so in time. Also, they should have asked for the necessary approval to run a securities operation.
ZXG Crypto Fund Also Closes
The South Korean exchange Zeniex created the fund as a conjunct investment between South Korean and Chinese investors. They also informed that they will be stopping the fund operations in a separate announcement. The statement declares:
“With recent developing issues, we believe that ZXG Crypto fund No 1. is and will have difficulties to operate smoothly with such current pressure from the financial authorities. As such we feel heavy responsibility and have come to this unfortunate decision”
The exchange states in the announcement that the funds will be returned to the investors at their Ethereum average equivalent price.
Korean Government Policy
The Korean cryptocurrency market is one of the biggest in the whole world. Despite this, the Korean government has not legalized or showed any stance regarding cryptocurrencies. The Financial Services Commission treats every cryptocurrency related issue in a case by case basis, much like the Securities And Exchange Commission from the USA.
However, they have an interest in regulating the cryptocurrency space in a clear way. The Finacial Services Commission introduced anti-anonymity laws to prevent criminals from using exchanges as money laundering gateways. But even now, lawyers are asking for more explicit, clear laws that let cryptocurrency related startups operate in a legal environment.