South Korea’s Zeniex Exchange to Shut Down its services

The South Korean exchange platform Zeniex has decided that will end its services on November 23.

The exchange platform was officially launched on May 8, 2018; a project that was established in collaboration with South Korea and China. The exchange had launched ZXG Crypto-token in September, as the country’s first virtual currency fund.

Earlier this month, Zeniex blamed the development problems it met while issuing the ZXG tokens.

Here is an excerpt from their online post dated 11 November:

“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 service will be difficult. It is with much regret to announce that all services of Zeniex will be terminated on November 23, 2018.”

To read the entire post, click here.

Although, the platform has stopped its cryptocurrency trading services on November 9. According to recent notice made by Zeniex, starting of November 12, holders of the tokens will have to accept their compensation in Ethereum(ETH).

While talking about other assets, the platform made it clear for users to withdraw them before the closure of their services.

Because of their fund, ZXG Fund 1, Financial Supervisory Services(FSS) and the Financial Services Commission(FSC) of South Korea have requested investors to stay cautious about the digital currency funds.

The reason that prompted them to come out with such a message was that the Capital Markets Act preventive measures were not applicable to these type of assets.

According to Business Korea, here’s their statement:

“The virtual currency funds have never been registered in the Financial Supervisory Service, and their financial investment guide on their homepage has not been audited by the Financial Supervisory Service. None of the management company, sales company, and the trustee have been approved by the Financial Services Commission.”

The Financial Services Commission(FSC) has also not granted any approval to the trustees, sales or the management of the company. As per the law, the asset management firm managing the funds along with the company that is controlling the sales part needs to get a financial approval of regulators.

To protect the investors, there have to be regulations with regards to meeting the minimum capital requirements and avoiding conflicts should be taken into consideration.

In a recent interview to Maeil Business Newspaper, a representative from Zeniex clarified that the company was not compelled to register itself as it had only managed to raise less than a billion Won. Nevertheless, during the investigations against the company, FSC stated that there is a lack of capability to verify whether the platform is operating as claimed.

During the investigations, the president of the association of legal practitioners in South Korea, Kim Hyun had this to say

“We urge the government to break away from negative perceptions and hesitation, and draw up bills to help develop the blockchain industry and prevent side effects involving cryptocurrencies.”

As of now, the cryptocurrency industry in South Korea has somewhat become a bit bitter, thereby denying them financial incentives and benefits that are offered to startups.

Moreover, the South Korean government is going hard on these platforms by declining cryptocurrency and blockchain firms as venture firms.