After discovering that some token projects have been violating rules, South Korea has maintained its firm stance not to lift the ban on local initial coin offerings (ICOs).
The Financial Services Commission (FSC) has said that an ICO investment involves “high risk,” warning the public to be extra careful when investing in token projects.
The FSC decision was influenced by the results of a survey done by the Financial Supervisory Service (FSS), suggesting that some of the ICO projects abroad had also allegedly raised funds from Korean investors.
Beginning September 2018, the FSS sent the survey questionnaire to domestic firms that conducted ICOs abroad. Out of the 22 local firms, only 13 responded. The companies have raised a combined total of around 566.4 billion won ($509 million), for holding ICOs since the second half of 2017.
The research discovered that companies tried to avoid the ICO ban by registering in Singapore, yet still raised money from Koreans. The ICO projects even had marketing materials and white papers translated into the Korean language.
According to the survey, some ICOs failed to disclose vital information to investors such as company profile and financial statements. The research also found that some provided false information. The projects were high risk for investors since the value of their tokens had decreased by an average of 67.7 percent since launch.
The government of South Korea had said in October 2018 that it would make a decision whether it would allow ICOs in the country again in November.
The head of the office for government policy coordination, Hong Nam-ki, said that time that the country has been reviewing the issue in recent months and that the FSS survey would help them reach a final decision.