South Korean Financial Authorities Warn of Risks in Virtual Asset Exchange Leveraged Investments

According to reports from Yonhap News Agency, the South Korean Financial Services Commission and Financial Supervisory Service convened high-level executives from five virtual asset exchanges on July 25 to express concerns about the recent introduction of cryptocurrency lending services by Upbit and Bithumb. They pointed out legal disputes, inadequate user protection measures, and the potential impact of leveraged investments on the operators' stability. Bithumb recently launched a service allowing users to borrow up to 4 times the amount of cryptocurrency with assets or Korean won as collateral, supporting 10 cryptocurrencies. Upbit also introduced a service on the same day for 3 types of currencies with a maximum borrowing limit of 80%. These services allow investors to use short-selling strategies, especially Bithumb's high leverage of up to 4 times, raising concerns about inadequate user protection measures. Following the meeting with authorities, Upbit stopped its USDT lending service on the 28th, and Bithumb made unified adjustments to its lending services on the 29th, currently not accepting new applications due to reaching the limit. In light of the ongoing controversy, financial authorities have decided to establish a special task force with the industry to develop self-regulatory rules.

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