South Korea Begins Asset Recovery for Victims of Crypto Exchange Closures

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As a researcher with extensive experience in the crypto industry, particularly in South Korea, I find this development to be a significant step forward for investor protection and market stability. Having closely followed the chaotic events of 2024, where numerous exchange closures left countless users stranded, it’s heartening to see such proactive measures being taken.

In a recent development, South Korea is taking steps to help crypto users who were affected by the closure of some local exchanges. This initiative is being led by the Digital Asset Protection Foundation, with the aim of returning stolen funds and restoring faith in the country’s digital asset sector.

As reported by local news on Monday, the charitable organization has commenced overseeing assets moved from several defunct cryptocurrency exchanges, with the aim of securely returning them to the impacted account holders. At present, they are collaborating with eight digital currency companies to facilitate the transfer of user funds.

Assets From Five Defunct Exchanges Under Management

So far, the management has taken control of digital assets from approximately 40,000 users who were part of five shuttered platforms like Apro Korea, Ten & Ten, Hanbitco, Qbit, and Pay Protocol AG. The report indicates that these assets are only the initial batch, as the Foundation intends to complete talks with three more service providers by the end of this year.

In September 2024, the Financial Services Commission (FSC) founded the Digital Asset Protection Foundation to manage the consequences arising from exchange shutdowns and facilitate users in retrieving their investments.

Beyond managing secure transfers of users’ assets, the organization is presently monitoring approximately 200 million Korean Won (equivalent to $152,000) in traditional bank deposits from digital asset platforms. These funds were held by these platforms before South Korea implemented its real-name verification system.

Platforms like Porisdax Korea Limited, Pobble Gate, and Korea Digital Exchange are among those joining forces for this initiative.

Why the Foundation Was Created

In 2024, the Digital Asset Protection Foundation was formed as an immediate reaction to the upheaval caused by numerous exchange closures in South Korea. More than a dozen crypto platforms shut down, affecting around 34,000 users who were left with unclaimed assets amounting to approximately 17.8 billion won ($13 million).

The closures occurred due to the exchanges’ reluctance to comply with South Korea’s tighter cryptocurrency regulations, such as those implemented through the Virtual Asset User Protection Act.

To address the immediate concern for safeguarding investors, the Financial Services Commission formed the Foundation, a not-for-profit entity. This organization serves two primary functions: shielding users from potential harm and reducing market turbulence triggered by the unexpected failure of digital asset trading platforms.

Chair Kim Jae-jin underscored once more the Foundation’s dedication to assisting users in regaining their assets and helping troubled cryptocurrency platforms wind down their activities in an orderly manner.

To ensure that digital asset users are safeguarded and their true rights and benefits are preserved, we will encourage exchanges to meet their responsibilities in protecting users, as well as facilitating a smooth closure for those businesses deciding to discontinue operations.

Users must go through a straightforward identity confirmation procedure to access their funds. At the moment, these procedures are managed through emails, however, the Foundation plans to simplify this by introducing a specialized recovery platform in January 2025.

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2024-12-17 02:22