Korea’s leading exchanges established a new emergency system after the Terra-collapse incident
Leading South Korean exchanges have agreed to form a new emergency system that will operate within 24 hours if another Terra-style crash is at risk.
Korean exchanges agree on the emergency system in case of Terra-style collapse
Under the new system, exchanges will convene in response to sudden adverse market effects, such as what happened to Terra in May.
The deal comes after the country’s five largest cryptocurrency exchanges, Upbit, Bithumb, Coinone, Korbit, and Gopax, attended a session at the National Assembly, South Korea’s legislative body, to address the issue. fair market on June 13. Exchange leaders, members of the National Assembly, and Financial Supervisory Services (FSS) Chairman Lee Bok-hyeon discussed aspects of a new code of conduct that exchanges will voluntarily adhere to protect investors.
The new token will also be rolling out an alert system in September to alert investors to virtual assets that are unusually high-risk due to unusual price changes or other unusual activity. In October, the listing guidelines will be reviewed, and a regular review system will be in place for all listed tokens.
In May, the collapse of the Terra ecosystem resulted in tens of billions of dollars in damages and a series of legal troubles for the founder, Do Kwon, who was confirmed to have evaded around $40 million in taxes. through Terraform Labs.
The code aims to systematize the listing and segregation of tokens to maximize regulatory compliance and eliminate differences in listing guidelines between each exchange.
On Thursday, a Korean market lead from Ledger Jun Hyuk Ahn said that this new direction would bolster investor confidence in crypto exchanges that have been on shaky ground for years. “It’s too early to predict exactly what will happen, but it should bring more harmony to the market,” he said. “More transparency on listing and delisting processes will help bring back the trust from crypto traders lost through the Luna incident.”
When it went down, domestic exchanges had to take responsibility for letting investors trade LUNA. The number of South Korean LUNA holders increased by 180% between May 6 and May 18, from 100,000 to around 280,000. At the time, the Terra USD stablecoin fell in price, and LUNA fell from over $60 to less than $0.01. The new guidelines will aim to prevent exchanges from allowing investors to trade such highly volatile tokens by either stopping trading within 24 hours or delisting them together.
— Jaemin Park (@jaemin_eth) May 24, 2022
On the other hand, a local report from News1 on Wednesday stated that exchanges could lose money in the long run if guidelines are established. The report indicates that the strict new listing guidelines will hinder exchanges’ ability to generate revenue from altcoin listings. “Domestic exchanges often secure profits by listing altcoins that are not listed by competitors because altcoin trading volumes are quite high.”
Korean exchanges have shared the spotlight with the Korean founder and CEO of Terraform Labs, Do Kwon. Kwon has been investigated by the feared Financial and Securities Crime Investigation Team, otherwise known as the Grim Reapers of Yeoui-do, for alleged malfeasance and tax evasion.
On June 15, the Grim Reapers uncovered documents from the Seoul tax office that confirm Kwon and Terralabs evaded about $40 million in corporate and income taxes in 2021.
Kwon has denied allegations of money laundering and tax evasion, including one claiming that he made more than $2.7 billion in the past three years from the Terra ecosystem. However, the SEC still wants to see Kwon at the US Court of Appeals on charges of selling unregistered securities through the Mirror Protocol.
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