In 2024, more than a dozen South Korean cryptocurrency exchanges either closed or temporarily suspended their operations, resulting in nearly 34,000 users unable to access assets valued at approximately 17.8 billion won ($12.8 million). This development follows South Korea’s implementation of the Virtual Asset User Protection Act, which imposes strict regulatory requirements on crypto exchanges.
The Financial Services Commission (FSC) data shows that 11 exchanges have permanently closed, while three others—Oasis, Flata Exchange, and Btrade—temporarily halted services at the end of September. Users affected by these closures now face an uncertain path toward reclaiming assets, including both cash and cryptocurrency holdings, now locked within these platforms.
Key Exchanges Impacted
Among the impacted platforms, Cashierest—which shut down in late 2023—holds the largest share of customer assets at 13 billion won, followed by ProBit with 2.25 billion won and HTX (formerly Huobi) with 579 million won. In total, these shutdowns have frozen substantial user funds, sparking widespread frustration and concern among crypto investors in South Korea.
Meanwhile, Oasis, Flata Exchange, and Btrade currently hold about 30.7 billion won in assets combined. This sum includes 16.2 billion won on Oasis and 14.35 billion won on Flata Exchange, both of which suspended operations as they navigate compliance and review processes under the new legislation.
Also read: Uniswap’s Cross-Chain Feature Shakes Up Crypto Market, Challenging Binance’s Dominance
Regulatory Challenges and Market Downturn
Rep. Kang Min-kuk, a member of South Korea’s People Power Party, noted that additional crypto platforms are likely to close or halt operations as regulatory compliance costs increase, and the market faces a downturn. Although the FSC has issued guidelines for returning users’ assets, successfully recovering these funds has proven difficult due to complex operational and legal barriers.
The Virtual Asset User Protection Act, which was passed in 2023, mandates higher transparency, improved asset protection measures, and increased reporting requirements for cryptocurrency exchanges, aiming to secure user funds and enhance overall market stability. However, the costs associated with meeting these standards have proven challenging for smaller and mid-sized exchanges, many of which opted to cease operations rather than face the financial burden of regulatory compliance.
What’s Next for South Korean Crypto Investors?
The sudden closures and frozen assets highlight the need for streamlined processes for asset recovery in the event of exchange shutdowns. While financial authorities continue to push for user asset recovery, challenges persist, especially for exchanges operating in precarious financial positions or those facing liquidity issues due to ongoing market struggles.
For South Korean crypto investors, the next steps may involve legal proceedings or assistance from regulatory bodies to facilitate asset recovery. However, as the regulatory landscape tightens, experts anticipate further consolidation within the crypto industry, with only larger, financially stable exchanges likely to withstand the pressures of regulatory compliance.
