The South Korean financial authorities are investigating 20 publicly listed companies for unethically using cryptocurrency claims to boost their share prices. Crypto-related companies do not always follow through with their plans after seeing their share prices swell.
The South Korean Financial Supervisory Service (FSS) has been investigating 20 crypto-related companies listed on the country’s stock exchange, Kosdaq, for unfair practices, local media reported.
The country’s financial authorities have also issued a caution to investors “that a number of unfair trade transactions were found in so-called ‘virtual currency-related stocks’ in the stock market,” Yonhap detailed. The Korean Banker elaborated:
There has been a frenzy of virtual currency related stocks in the stock market…Many listed companies have announced related business plans such as [launching] virtual currency exchanges and so-called ‘virtual currency themes’. The share price of the virtual currency stock surged due to the announcement of the business plan.
Among the schemes used are the formation of crypto exchanges and the announcements of initial coin offerings (ICOs).
“Many companies have published virtual currency-related business plans through disclosure and media, but in reality, there are many cases in which the business is delayed or the business is unclear,” Business Post conveyed.
Presently, South Korean companies that have crypto-related businesses “include Mgame, CTL Inc, Woori Technology Investment, SCI Credit Rating & Information, Hanbitsoft, Fourthlink, Makus, and Igis System,” Ddaily detailed.
On the other hand, the financial authority did not reveal the names of the listed companies it is investigating. An FSS official explained that this is “because of market stabilization,” highlighting that the companies’ names are not disclosed because it would “directly affects the stock price” of each company involved.
The FSS said that it will continue to monitor and sanction companies unfairly using cryptocurrencies to boost their shares. “In the future, we will take serious measures against unfair trading in stocks, which [we] will on the dot investigate virtual currency-related stocks that are likely to be unfairly traded and cause damage to a large number of investors,” the news outlet detailed.
Lee Seung-woo, Chairman of the Korea Deposit Insurance Corp and former Vice-Chairman of the FSS, commented:
Although the number of virtual currency-related shares has recently increased sharply…it is difficult to say that all of them are related to virtual currency…We will conduct a full-scale investigation into the presence of unfair exchange practices among the 20 related stocks surveyed and plan to increase the number of such surveys in the future.