First Cryptocurrency Fund in South Korea Closes Amid Regulatory Pressure

Seoul is still playing hardball with local cryptocurrency businesses.

Zeniex, a minor South Korean cryptocurrency exchange which opened the country’s first cryptocurrency investment fund, is closing down as a result of the general government crackdown, according to Yonhap.

Unable to Meet Expectations

The exchange was first opened in May 2018, and has handled $410,000 worth of transactions in the last 24 hours, according to its website. The site lists an address in Seoul, but no team members are displayed.

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According to an official statement, it is closing its doors because “we have come to the conclusion that continuing to operate such service will be difficult.” It adds: “We sincerely apologize that we were unable to meet the expectation of our Zeniex users and supporters.”

MultiVAC

The authorities did not take any overt action against the exchange, which is not significant in size. Attention was attracted because of its cryptocurrency investment fund, called Zxg Crypto Fund No. 1, which was reportedly the first such entity in the country.

The Financial Services Commission and the Financial Supervisory Service, two of the country’s financial watchdogs, specifically warned against this entire in October because it was not approved by the authorities.

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According to the website, the fund was scheduled to raise 1,000 ETH (approximately $212,000) in mid-September; it does not say if this was completed successfully. Either way, the company claims that the money raised was not enough to require that it report to the authorities.

The fund’s section of the website lists two projects – one called MultiVAC, which the Asimov fans among you will recognise as the name of a fictional world computer (although this iteration of MultiVAC is a “next-generation public blockchain designed for large-scale and complex distributed applications,” which runs of a Byzantine consensus protocol), and one called Blockcloud, which raised over a million dollars in its recent ICO, if its website is to be believed.

Zeniex says that the fund is being closed because it “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.”

It intends to return all purchased tokens to the buyers.

Cryptocurrency investment funds are all the rage nowadays, with tens of them popping up all over the world. Even the Chinese government has some. The Korean government is still not so accepting, which is significant because of the size of the Korean cryptocurrency market. 

 

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