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South Korea’s Zeniex Closes Amid Government Crackdown on Unauthorized Crypto Exchanges
South Korea’s cryptocurrency exchange Zeniex will soon terminate its services due to a recent government crackdown on unauthorized platforms, a post by Zeniex reveals Friday, Nov. 9.
The crypto exchange, a joint project by South Korea and China which opened May 2018, states in the post that due to “recent issues,” they have “come to the conclusion that continuing to operate such a service will be difficult.”
While crypto trading has already stopped on Nov. 9, all other services will be stopped on Nov. 23.
Zeniex customers are asked to withdraw all their cryptocurrencies before the deadline, as the service will then no longer be available.
Furthermore, in a separate announcement, the company states that Zeinex cryptocurrency fund Zxg Crypto Fund No. 1, which in particular has been a subject to local regulator’s investigation, is also closing on Nov. 23. Initially, the company expected its ZXG token to be listed by international exchanges, but then the decision was then cancelled, according to the press release:
“We believe that ZXG Crypto fund No 1. will have difficulties to operate smoothly with such current pressure from the financial authorities.”
Zeinex and its Chinese partner, Genesis Capital, will return the funds invested in ZXG in Ethereum (ETH) on Monday, Nov. 12.
In late October, South Korea’s Financial Services Commission (FSC) warned investors about investing in unauthorized crypto exchanges and Initial Coin Offerings (ICO), as they fail to protect investors from risks according to Korean regulation.
As local finance newspaper Business Korea explained, the notification in particular mentioned Zxg Crypto Fund No. 1. The FSC stressed that the company had never been registered by the Financial Supervisory Service as required by South Korea’s Capital Market Act.
A Zeniex representative told South Korea’s main daily business newspaper, Maeil Business Newspaper, that the company was not obliged to register as it had raised less than 1 billion won ($884,500) in total. However, the FSC started the investigation against the company, citing a lack of ability to check whether the platform is operating as claimed.
Although in early 2018 South Korea was rumored to be about to impose a strong ban on crypto, the country then decided to regulate the area instead. Banning anonymous trading, forbidding minors and government officials from trading, and taxing exchanges substantially were among the measures announced by country’s government to control crypto-related activities. The government has since recently been lobbied by local lawyers to clear up its stance on crypto and elaborate a clear legal framework.