South Korea’s top financial regulator, that was expected to relax restrictions on domestic initial coin offerings (ICOS), now says it will not be lifting the restrictions citing violation of rules by some ICO projects.
A report from Coindesk Korea read;
“ICO investment is a “high risk” activity, the Financial Services Commission (FSC) said, calling on the public to exercise caution when investing in token projects”
This decision by the FSC was informed by the results of a survey conducted by the financial supervisory service (FSS). The results showed that some ICOs that were purportedly conducted abroad had illegally raised funds from unsuspecting Korean investors.
The FSS set out to conduct the study in September last year, sending out questionnaires to 22 local firms that had conducted ICOs of which only 13 responded. The companies had conducted the ICOs as from mid-2017 where a combined total of about 566.4 billion won ($509 million)
The research further revealed that ICO conducting firms had been setting up paper companies in Singapore inorder to go around the South Korea ICO ban, yet still went on to raise money from South Koreans. This was evidenced by Korean language white papers and marketing materials.
Some ICO projects were also singled out for not disclosing important details such as their financial details and company profile. Some of the singled out companies also provided false information according to the report.
The research noted that investor risk was through the roof since the value of the project tokens had dropped by an average of 67.7 percent since launch.
South Korean firms had been waiting with bated breath after the government had let it be known that it would consider lifting the ban on domestic initial coin offerings (ICOS). Hong Nam-ki was the man who sent tongues wagging last October. The head of the office for government policy coordination revealed that the government was thinking about lifting the lid on the restriction.
It all seems highly unlikely now, with the latest damning report from the FSS. This is likely to plunge the country right back to square one, when it comes to ICO’s. There is no telling the government’s next move, but you can bet on the fact that the government will take its time before it loosens the leash on ICOs
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