The top financial regulator in South Korea has revealed that initial coin offerings (ICOs) are still banned in the country after it found some token projects have been violating the rules. This is according to CoinDesk Korea.
South Korea’s ICO ban still in place
South Korea’s Financial Services Commission (FSC) has tagged ICO investment as a high-risk venture and warned the general public to be extremely cautious when investing in token projects.
The FSC made this call after a survey carried out by the Financial Supervisory Service (FSS) revealed that some ICOs conducted by Korean firms abroad had raised funds illegally from investors in Korea.
FSS sent out a survey questionnaire to 22 local firms in September 2018. These firms carried out token sales in foreign countries since the second half of 2017. Amongst them, 13 companies responded to the questionnaire and were able to raise roughly 566.4 billion won (509 million USD) collectively during that period.
The companies set up paper companies in Singapore, allowing them to circumvent the ICO ban and raise funds from Korean investors.
The research found that some ICO projects didn’t reveal some crucial information to investors like company profile and their financial statements. In some cases, the information provided was false.
The FSS mentioned that investor risk is high because the value of the ICO tokens had plunged by an average of 67.7 percent since launch. The government had previously announced that it would decide in November 2018 regarding lifting ICO ban in the country.
In October, Hong Nam-Ki, head of the office for government policy coordination stated that regulators in South Korea have been looking into the topic and the FSS survey would help their decision-making process.
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