The South Korean ban on ICO has been in the news severally with speculations that the government was revisiting it to end the ban. This many not happen any time soon as country’s regulator has announced that many Korean companies circumvent the ban by raising funds through offshore companies.
The FSS Survey
This may not have been an issue were Koreans not involved in the crowdsales. However a survey of 22 Korean companies that conducted ICOs in the recent past shows that they mostly used companies registered in Singapore to sell tokens to Koreans despite the ban.
The Financial Supervisory Service (FSS) survey showed that Koreans were evidently targets of the token sales since most of those ICO had whitepapers with Korean versions.
The Financial Services Commission (FSC) the Korean financial watchdog has repeatedly warned investors to desist from investing in initial coin offerings calling them “high risk” investments.
The survey seems to confirm the agency’s assertion since most of the tokens sold by the Korean companies have lost up to 67.7 percent of their values since the taken sale.
Losses and Scams
Although just 13 of the surveyed companies responded to the queries, the companies that sold their tokens in the latter half of 2017 have been found to have generated 566.4 billion won ($509 million).
Of concern to the agency is not just the fall in value of the tokens sold to investors, there are indications that scammers have taken advantage of initial coin offerings to sell dubious tokens that have neither utility nor prospect of giving value to investors.
The Financial Services Commission is emphatic that there are no plans to lift the ban on ICOs in the meantime.
FSS Survey Played Role In Decision
Since the Q4 2017 ban, government authorities including a deputy have announced that the ban would be revisited, but with the recent pronouncement of the FSC it is obvious that the Korean crypto community would wait a long time before seeing that happen.
Hong Nam-ki a senior government official admitted that there have been requests to lift the ban. He stated that the FSS review will play a role in decision-making regarding ICOs in the country. Obviously the result hasn’t favored a lift in the ban.