"Too Difficult" Coin Investors Struggling with Information Imbalance

Most White Papers Are Written in English, Taking Ages to Interpret
No Legal Penalties for False Disclosures... "Industry-Specific Laws Needed"

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[Asia Economy Reporter Gong Byung-sun] Recently, Choi Ji-won (27, pseudonym), who was about to participate in the cryptocurrency market, was advised to read the whitepaper before investing. However, upon opening it, he was immediately overwhelmed. It was all in English, and the terminology was too difficult. Ultimately, he gave up reading the whitepaper and had no choice but to invest by "guesswork." He said, "Even the whitepaper, which contains the basic information about the cryptocurrency, was hard to read," and added, "I feel uneasy because there is a lack of information about the cryptocurrencies I invested in, or the information is not produced by a credible source."

As the number of participants in the cryptocurrency market increases, voices complaining about information asymmetry are emerging. They expressed dissatisfaction that since whitepapers are in English, it is difficult to grasp the basic content, and the disclosure system is also unreliable, forcing them to rely on rumors or intuition for investment.

Currently, cryptocurrency whitepapers are listed on each exchange. Anyone who needs basic information about a cryptocurrency can read them. However, most whitepapers are in English, making it difficult to understand the content. While most cryptocurrencies are issued by overseas developers, even those developed by domestic developers have whitepapers written in English. In fact, among the 178 cryptocurrencies listed on the domestic cryptocurrency exchange Upbit, only 38 support Korean whitepapers.

Because translations are not provided, people who are not familiar with English either misinterpret the content or give up reading the whitepapers altogether. It becomes even harder to read when specialized terms such as nodes, hash functions, and proof-of-stake methods are mixed in. Experts advise participating in investments after reading the whitepapers, but even reading them is a struggle.

There are also significant complaints from cryptocurrency market participants about the disclosure system. Since it relies solely on the conscience of the cryptocurrency issuers, the disclosures themselves are hard to trust. Currently, the cryptocurrency market operates its own disclosure system, so there is no unified format or official verification process for disclosures. Previously, Upbit, which had difficulty verifying the authenticity of disclosure content, switched to a free bulletin board format for disclosures.

The problem is that there are no regulations to punish cryptocurrency issuers even if they make false disclosures. Currently, if a false disclosure is made, the cryptocurrency is subject to sanctions such as being delisted from exchanges, but it does not lead to legal punishment. For example, on the 16th of last month, GoMoney2 falsely disclosed that it had attracted investment from the U.S. cryptocurrency asset platform Celsius Network. Upbit immediately delisted GoMoney2, but no legal punishment was imposed. According to the domestic cryptocurrency exchange Bithumb, GoMoney2 rose to 74.75 won on the 16th of last month but was trading in the 12 won range as of that day. This represents a drop of about 84% from its peak.

As a result, participants in the cryptocurrency market had no choice but to invest by guesswork. They tend to follow the rapidly rising trend without proper information. In fact, when Dogecoin, which is considered worthless, surged 104.82% in one day on the 16th, its trading volume even surpassed that of the KOSPI.

Accordingly, there are calls for caution when investing in cryptocurrencies. An industry insider said, "It is understood that many ordinary people invest without knowing about cryptocurrencies because it is difficult to absorb the contents of whitepapers," and added, "The industry plans to revise whitepapers to make them easier for investors to understand, and if laws such as the industry-specific act are enacted, disclosure-related regulations will also be established to protect investors."

This content was produced with the assistance of AI translation services.