South Korea’s newly implemented Virtual Asset User Protection Act has led to the closure of several crypto exchanges in 2024, leaving approximately $12.8 million of customer investments stranded. Investors are now eligible to reclaim their funds, with assistance from the government.
According to a report by the Korea Times, 11 virtual asset exchanges have ceased operations entirely, while three others have suspended their services temporarily. Rep. Kang Min-kuk of the ruling People Power Party revealed these details, highlighting the significant impact the regulatory changes have had on the market.
New Law Facilitates Asset Reclamation
Introduced in July 2024, the legislation was designed to protect crypto investors by establishing a framework for recovering assets when exchanges fail. A key component of the law is the creation of the Digital Asset User Protection Foundation, which acts as a trustee to help users recover stranded investments without navigating complex legal proceedings.
34,000 Crypto Investors Can Claim $12.8M from Closed Exchanges
A total of 33,906 subscribers can now reclaim both cashable and virtual assets from the shuttered exchanges. The exchanges collectively hold 17.8 billion won ($12.8M), including 1.41 billion won ($1.02M) in cashable assets and 16.4 billion won ($11.8M) in virtual assets.
Among the exchanges:
- Cashierest holds the largest sum, totaling 13 billion won ($9.4M).
- ProBit follows with 2.25 billion won ($1.63M) in customer assets.
- Huobi manages 579 million won ($420K).
More Funds Inaccessible Due to Service Pauses
Additionally, 30.7 billion won ($22.2M) remain locked in three crypto exchanges that have temporarily halted services. These include:
- Oasis with 16.2 billion won ($11.7M),
- Flata Exchange with 14.35 billion won ($10.4M), and
- Btrade holding 80 million won ($58K).
These service pauses may increase the number of affected subscribers struggling to reclaim their investments.
Regulatory Pressures May Lead to Further Exchange Closures
Rep. Kang Min-kuk cautioned that more crypto exchanges might either shut down or pause their services as the Financial Services Commission (FSC) continues its renewal review process. Recent scandals, including the Do Kwon case, have spurred public and regulatory demand for stronger oversight in the crypto markets, contributing to South Korea’s regulatory push.
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