South Korea Updates its Stance on ICOs After Investigations

South Korea has finally completed its 3-month investigations on the ICO offerings by different crypto service providing firms in the country and has come up with its stance after the investigation.

The investigation agency has found that many companies have by-passed its ICO ban and have conducted several Initial Coin Offerings overseas. The investigation was started back in September last year when the government found many irregularities in the companies offering ICO related services.

The Investigation

The investigation which saw the South Korean government monitor 24 companies and their offerings for over three months, has finally completed the investigation and the results which would decide the future of ICOs in the country is finally in the public domain.

One Of the Investigating officers said,

The Korean government on Jan. 31 said it will maintain a strict ban on initial coin offerings, saying that a three-month investigation proved they are very risky.

One of the officers under the Prime Minister’s Secretariat has said that, even if they would have issued certain guidelines, the companies might have found one or the other loophole around it.

The officer was quoted saying,

“We will continue to remain cautious about systemizing ICOs, If we suggest guidelines, it can be understood that we approve of ICOs which is a risky investment option.”

The South Korean government banned ICOs completely in September 2017, in December 2017 one startup filled a constitutional complaint against the ban calling it unconstitutional.

The Final Outcome of the 3-Month Investigation

The investigation into the ICO companies was started back in September 2018 and continued till November 2018. During this period The South Korean Financial Supervisory Service (FSS, asked 24 companies related to ICOs to cooperate with the investigators.

These 24 companies were sent a set of questionnaires, and their press releases & white papers were reviewed thoroughly by the investigators. The result from 22 companies was analyzed and the final outcome revealed many shortcomings and loopholes in the ICO offerings by these firms.

The regulators found that none of the 22 companies have a solid project road map and all of them are in testing phases. The investigators also found that most of the ICO conducting South Korean firms went overseas during the ban.

These firms went abroad in places like Singapore and started ICO services with less than $9000 in the capital and in some cases only three employees. The investigation found out that many of these firms were involved in illegal token offerings.

The Office for Government Policy Coordination was quoted by The Investor as saying:

“There were cases of important investment information missing, such as company introduction, business plans, and financial statements … Especially, there was no disclosure on how those funds were used and most of them refused to answer the financial authorities’ request.”