[Jeon Daegyu's 7 Trials and 8 Failures] Is the Cryptocurrency Exchange Doing Well?

"I was tired of this kind of stitching. I just wanted to attach something like a booster and soar all at once. I wanted to jump. I wanted to leap up. I truly wanted to experience what it means to march high in the sky. It was something that had never happened in my life, did not exist even in my imagination, and therefore I had never even hoped or expected it. But right now, it was flashing and unfolding right before my eyes. J"

This is a scene from the novel Dalkkaji Gaja (Let’s Go to the Moon) by Jang Ryujin, which deals with the story of three young women from humble backgrounds boarding the cryptocurrency train. In 2021, South Korea is having a heated year with cryptocurrencies. As the author says, it’s crazy. Due to severe employment difficulties and soaring real estate prices, the youth who have lost the leaps and rises experienced by previous generations may have nothing left but coins.

Will the cryptocurrency craze continue? Is a smooth soft landing possible? The coin investments of the protagonists in the novel end in a happy ending. Cryptocurrency exchanges exist outside the regulatory framework and are unregulated. While there are optimistic views about the future, there are also warnings that the bubble will burst anytime since cryptocurrencies have no intrinsic value and are speculative targets. Recently, there was a sharp drop in cryptocurrency prices, and some cryptocurrency exchanges temporarily suspended trading. Until now, anyone could operate a cryptocurrency exchange by registering as a telecommunications seller or e-commerce business without government approval or notification. However, under the “Act on Reporting and Using Specified Financial Transaction Information” enacted this year, cryptocurrency exchanges must meet certain requirements and complete registration with the Financial Intelligence Unit (FIU) from September to operate.

Are cryptocurrency exchanges safe? Based on blockchain technology, is something that is not even currency but called cryptocurrency misleading the youth with nowhere to go? Individual countries, which implement independent economic policies, would never give up one of their important powers, the right to issue currency. The moment they give it up, financial policy, an important pillar of economic policy, becomes useless. With the enforcement of the new law, it is predicted that all cryptocurrency exchanges except a few will close. Currently, there are no legal protections for investors, and taxation on cryptocurrencies is also being pursued.

Concerns about cryptocurrency exchanges have already been detected in courts. In 2019, the Seoul Bankruptcy Court received its first bankruptcy petition for a cryptocurrency exchange. Exchange A filed for bankruptcy after an executive managing the exchange’s electronic wallet lost the private key to the exchange’s wallet, making it impossible to return 520 bitcoins held in the wallet at the time. Exchange A was declared bankrupt and bankruptcy proceedings are ongoing. Exchange B filed for bankruptcy after some users of the exchange used the collection account for voice phishing crimes, withdrew virtual assets, causing the account’s transactions to be suspended, and continuous errors in cryptocurrency balances made it impossible to continue operating the exchange.

Government regulation of cryptocurrencies will soon begin, and with the implementation of new systems, cryptocurrency exchanges caught up in the frenzy will soon reveal their true nature. Whether cryptocurrency exchanges will settle or lead to large-scale bankruptcies, not much time remains.

Jeon Daegyu, Chief Judge, Seoul Bankruptcy Court

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