After hardly five months of operational launch for services, one of the cryptocurrency exchange companies of South Korea is shutting down the firm. The South Korean exchange company launched back in May this year, and according to the recent reports, it will close down the services from 23 November.
The exchange explained the reason behind the surprising reveal through an officially issued statement where they blame the arising developmental issues regarding their ZXG tokens. The statement reads, “With recent issues regarding ZXG, we have gone through great deliberation both internally and externally. As a result, we have come to the conclusion that continuing to operate such a service will be difficult.”
The trading of ZXG token, however, stopped trading since November 9 as the company was quite aware of repercussions of dealing with a problematic asset. But the second notice released by the company, asserts the token holders to accept the reimbursement in Ethereum from November 12.
Apart from the token loss and compensation, recently the company requested all its customers to withdraw their cryptocurrency assets before their termination deadline for the warned services. The notices released to the public along with the recently declared statement about the termination of the company services altogether, which launched almost six months ago.
The current events in the exchange lead us to the root of the problem leading to shut down seems to be from the first cryptocurrency fund of South Korea, launched by Zeniex called the ZXG Crypto Fund 1. By the end of October, the Financial Services of South Korea and Financial Supervisory Services warned the investors to be alert against virtual currency funds claiming that the market safeguard acts are not applicable to such funds.
The reports from Business Korea suggest that this happened because Zeniex wasn’t listed with FSS and the regulator didn’t audit the fund’s financial venture guide. This error caused the company accused of violating the law as for the funds to come under the Capital Markets Act they need to register with the FSS primarily. Along with that, for the fund to receive capital from general investors, it needs securities report filing which was also missing.
For the company to be in charge of the selling to investors, the law says that the exchange needs permission from the FSC to do. The issue was analyzed, and there was no apparent approval from the security organization to the exchange company, management company or the authorities in charge of the situation.