Korean cryptocurrency exchange Zeniex is closing shop. Just five months old, the Korean-Chinese joint venture will stop operations on Nov. 23, citing problems with its ZXG token.

Holders of ZXG, the trading of which ceased on Nov. 9, must accept compensation in Ethereum. Holders of other crypto assets should withdraw them from the exchange before it closes.

According to CCN, regulatory issues were the root of Zeniex’s problems:

“Zeniex, which is a joint undertaking of Chinese and South Korean entities, had also launched South Korea’s first cryptocurrency fund, the ZXG Crypto Fund 1, and this seems to have been the root of the problem. Late last month, South Korea’s Financial Supervisory Service (FSS) and the Financial Services Commission (FSC) urged investors to be cautious about virtual currency funds saying that the Capital Markets Act safeguards were not applicable to such assets.

According to Business Korea, Zeniex’s crypto fund was not registered with the FSS and neither had the regulator audited the fund’s financial investment guide. This was in violation of the law since South Korea’s Capital Markets Act requires all funds to undertake registration with the FSS. Funds that collect from general investors must also file securities reports.”

The CCN report also noted regulatory hostility toward the cryptocurrency sector, citing in particular the government’s refusal last month to recognize cryptocurrency and blockchain companies as venture firms.

At BitNews Today, Anna Zhygalina reports that there may be very good reasons for regulatory caution in Korea. Indeed, even Andrew Lim, President of the South Korea Blockchain Association, supported the government’s denial of crypto companies as venture capital firms, telling BitNews Today:

“There are too many uncertainties and volatility in the crypto market. We want less restrictions but self-regulating is not working… at least not yet… As a community we need to be more concerned about further legitimizing our companies. Crypto companies, that make transactions with digital assets have fiduciary responsibilities they must realize.”

And as Korean-language news site News1 notes, Bitcoin’s troubles and the volatility of the crypto market are likely to make Korean regulators even more cautious in deciding market standards for crypto.

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