In May, the 'Terra-Luna Crisis' broke out in the cryptocurrency industry. Terra and Luna prices fell about 100% in one week. Later, Terra and Luna were delisted from major cryptocurrency exchanges such as Binance and Upbit. As a result, about 52 trillion KRW evaporated. The number of victims of this outbreak is estimated at about 280,000.
However, in this situation, South Korean investors learned that there are more unstable factors than cryptocurrencies. It was the fact that various systems of coin exchanges in Korea were running without clear standards. Coins that were delisted on foreign exchanges were sometimes traded on Korean exchanges. Even if a specific coin was delisted, the timing of delisting was different for each exchange.
There was also a story that someone made a lot of profit right before a certain coin was delisted. No one knew which coin would be delisted from which exchange and for what reason. In such a situation, various controversies arise.
It was the Wemix incident that hit the coin exchange a few months after the Terra-Luna incident. On November 24, DAXA, a joint council composed of Korea's five major virtual asset exchanges, including Upbit and Bithumb, announced that it would end trading support for Wemix, WeMade's virtual currency, on 8th December. As a result, the price of Wemix plummeted, and the stock price of WeMade also plummeted.
The reason DAXA decided to delist Wemix was the discrepancy in circulation. Wemade made an explanation against the exchange, but the result was a decision to delist. Wemade also argued that delisting Wemix without clear standards is Upbit's tyranny.
Wemade protested that only companies that disclosed information on coin circulation are being penalized. In addition, Wemade pointed out that there is no clear guideline for distribution towards DAXA. Wemix decided to apply for provisional injunction against 4 exchanges and file a complaint with the Fair Trade Commission.
As DAXA announced, if there was a problem with Wemix distribution, it is a serious problem. However, DAXA must disclose accurate data accordingly. If it was delisted without any specific criteria, DAXA should consider what kind of compensation it should offer to Wemix investors who suffered damage.
DAXA delisted Wemix to protect investors, but the biggest victims now are those who invested in Wemix. Investors who have been damaged by DAXA's decision are preparing a damages lawsuit against DAXA.
It is a big problem that domestic exchanges have not made proper standards and systems while making a lot of money. There are still no laws in South Korea regulating cryptocurrency. Even when exchanges were listed or delisted, there were no agreed-upon rules that the parties could understand.
WeMade CEO Jang Hyeon-guk held a press conference on YouTube and said, "This is the tyranny of the exchange." He asked DAXA to clarify the reason for the delisting. DAXA Chairman Lee Seok-woo wrote “Justice will prevail” on his SNS right after the Wemix suspension was announced.
A bigger problem is the enormous loss of investors who invested in Wemix. Investing for high returns is risky. However, if the basic rules are not followed, the anger and resentment of investors will inevitably grow.
Problems that occurred in Wemix also occur in other cryptocurrencies. However, if some cryptocurrencies are withdrawn from the exchange like lightning, and some cryptocurrencies are traded intact, how can investors rationally choose investment targets?
The Korean coin exchange has created several controversies so far. But it didn't matter much when everyone was making money. But not anymore. It should be operated transparently so that those who have suffered damage can understand it. In order for domestic exchanges to operate reasonably, the Korean government must come forward and create new regulations.
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