South Korea joins China in banning coin offerings

Nick Sanchez
September 30, 2017

The move puts Switzerland in line with authorities casting a sharper eye on the new crowdfunding method, which has let digital currency entrepreneurs raise millions quickly by creating and selling digital "tokens".

China banned ICOs amid a wider crackdown on bitcoin and cryptocurrency.

The Financial Services Commission of South Korea announced it would ban the raising of funds in all forms of cryptocurrencies, reporter Reuters.

ICOs have become an increasingly popular way to raise money for companies not large enough to raise capital through an initial public offering of stock.

But the lack of oversight has attracted criminals, with some estimates showing about 10% of all ICO funds being stolen by thieves.

Oliver Bussmann, president of the Crypto Valley Association, a Swiss organization, said in a statement emailed to Business Insider that the announcement comes as no surprise.

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Bitcoin fell as much as 3.5%.

They may be a little late on the latter point, as even the likes of Vitalik Buterin have called a bubble in the ICO market. It plans to usesmart contracts on the Ethereum blockchain to pair up buyers and sellers automatically, eliminating the need for a central authority to match trades.

"At any sign of vulnerability, the first reaction would be a mass selloff in ether". Earlier this week, South Korean app maker Dunamu and US cryptocurrency exchange Bittrex announced a deal to launch a new cryptocurrency exchange in South Korea called Upbit.

Prosecutors in South Korea have recently caught four would be cryptocurrency traders who illegally raised 25 billion won (US$22mil) from 1,000 investors in a pyramid scheme growing in scale, the South Korea commission said. CBOE last month said it planned to roll out its own Bitcoin futures in the coming months.

Despite China's ban, some issuers, such as the upcoming Dragon ICO, found a workaround by issuing tokens in Hong Kong.

Yesterday's release of the Australian securities regulator's guidance framework for initial coin offerings (ICOs) could be is an important step forward for startups looking to crowd-fund a project using digital currencies, and could help further worldwide regulatory discussions on the issue.

Other reports by AllAboutTopnews

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