[THE INVESTOR] 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.
ICOs emerged as new funding methods for startups, becoming popular in late 2017 and 2018 along with the hype of cryptocurrency market.
With requests to allow ICOs piling up, the government investigated 24 companies and their offerings for three months starting September.
According to the government review of 22 completed ICOs, all of them were conducted after the second half of 2017 and the total funds raised ranged from 566.4 billion won (US$508.96 million) to 33 billion won on average per company.
“There were cases of important investment information missing, such as company introduction, business plans and financial statements,” the Office for Government Policy Coordination said in a statement. “Especially, there was no disclosure on how those funds were used and most of them refused to answer the financial authorities’ request.”
None of the companies have actually launched their projects and all of them are developing platforms or carrying out test services, it added.
Most of the 22 companies were set up as an overseas paper company and carried out ICOs overseas, but were intended for the Korean market.
“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 office under the Prime Minister’s Secretariat said, urging investors to be cautious.
Meanwhile, it also promised government support for blockchain, the underlying technology of cryptocurrencies.
“As the blockchain market grew from 37.2 billion won in 2017 to 136.8 billion won in 2018, it is providing new opportunities for companies,” it said.
By Park Ga-young (email@example.com)