Closed cryptocurrency exchanges returned only 3% of frozen funds … regulatory blind spots persist

Analysis by Yun Han-hong, People Power Party lawmaker

15 exchanges hold '38 billion won' nonetheless

Only 30 million won refunded out of 1 billion won requested

"Support needed such as expanding the DAXA agreement"<based on claimed amounts>

Applications to return assets held at virtual asset exchanges that have ceased operations show that the proportion of funds not received reaches 97%. Fifteen exchanges were found to hold a total of 38 billion won in assets even after closing, raising concerns that they are in a regulatory blind spot and are not properly taking measures to protect users.

According to data received by Yun Han-hong, a People Power Party lawmaker and chair of the National Assembly's Political Affairs Committee, from the Financial Supervisory Service and the Digital Asset Protection Foundation (DAXA) on the 30th, there are 15 domestic virtual asset exchanges that have ceased operations. The total size of the deposits and virtual assets they hold was about 38 billion won. CPlabs (13 billion won) and NewLink (13 billion won) held the largest amounts, followed by Platta Exchange (3.7 billion won), Hanbitco (3.16 billion won), Oceans (2.3 billion won), and PayProtocol (1.7 billion won). The asset sizes of Coin&Coin, Bitrade and others were not properly identified.

The proportion of users who received assets and deposits after the exchanges closed was extremely low. According to DAXA, from last October to September this year, the total amount of virtual asset return applications filed with these exchanges was 1.02148 billion won, but only 33.38 million won (3.3%) of that has been returned.

By number of cases, only 57 out of 254 cases (22.4%) were returned. By exchange, Platta Exchange received return requests totaling 973.48 million won but returned only 370,000 won, showing the lowest return ratio. There were 162 people who had not received a response after applying.

There are concerns that gaps in the management and supervision of virtual asset exchanges are causing user harm. DAXA handles the task of returning virtual assets from exchanges that have ceased operations, but only six domestic exchanges have signed agreements with it. The other exchanges are not bound by force and have been postponing returns, Yun said. Yun commented, "As return procedures are prolonged, concerns about user asset protection are growing," adding, "Simplifying return procedures and expanding the number of exchanges participating in the DAXA agreement are urgently needed institutional improvements, and financial authorities should actively work on support measures."

Reporter Jeong So-ram ram@hankyung.com