South Korea’s recent implementation of the Virtual Asset User Protection Act has resulted in the shutdown of several cryptocurrency exchanges this year, leaving customers with up to $12.8 million in stranded investments that are now eligible for reclamation.
As of now, eleven virtual asset exchanges have ceased operations, and three others have temporarily suspended their services. This information was disclosed on Thursday by Rep. Kang Min-kuk of the ruling People Power Party, as reported by the Korea Times.
The new legislation, introduced in July 2024, aims to regulate virtual assets and protect investors. It provides users with the means to recover their assets in the event of an exchange failure. Additionally, the law established the Digital Asset User Protection Foundation, which oversees asset recovery during exchange closures or collapses. Acting as a trustee, the Foundation simplifies the reclamation process, helping users navigate what can often be complex legal matters.
Nearly 34,000 Investors Eligible to Reclaim $12.8 Million
A total of 33,906 customers can now reclaim both cashable and virtual assets from the closed exchanges. According to Korea Times, these exchanges hold 17.8 billion won (approximately $12.8 million) in total investment assets, which includes 1.41 billion won ($1.02 million) in cashable assets and 16.4 billion won ($11.8 million) in virtual assets.
Cashierest has the highest customer assets, totaling 13 billion won ($9.4 million), followed by ProBit with 2.25 billion won ($1.63 million), and Huobi with 579 million won ($420,000).
Moreover, around 30.7 billion won ($22.2 million) remains inaccessible, locked in three exchanges that have paused operations. This situation could exacerbate the difficulties for subscribers trying to reclaim their investments. The affected exchanges include Oasis, holding 16.2 billion won ($11.7 million), Flata Exchange with 14.35 billion won ($10.4 million), and Btrade with 80 million won ($58,000).
Regulatory Pressure May Lead to More Exchange Closures
Rep. Kang anticipates that more exchanges may either shut down or suspend operations as the Financial Services Commission (FSC) continues its review process. Recent issues in the cryptocurrency sector, including allegations of fraud involving South Korean entrepreneur Do Kwon, have heightened concerns among regulators and the public, prompting a push for stricter regulations in the crypto market.
