Category Archives: Financial Supervisory Service

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The Mystery of the Sunken Treasure and The Cryptocurrency Exchange

An unusual story has emerged linking a salvaged treasure from a sunken Russian warship with a cryptocurrency exchange, according to Reuters.

The treasure reported being worth $130 billion was claimed to have gone down with Russian Cruiser Dmitrii Donskoi in 1905 off the coast of South Korea whilst engaging Japanese warships in the area.

The Korean company who is said to have discovered the shipwreck, Shinil Group, reportedly said that they would use the salvage to back a new cryptocurrency called Shini Gold Coin and would distribute the coins to any who sign with the exchange, named ‘Donskoi International’ after the sunken vessel.

“Shinil Marine said last week it had discovered the wreck of the Dmitrii Donskoi, a Russian armoured cruiser sunk in 1905 after fighting Japanese warships off South Korea’s Ulleung Island, and that a staggering 150 trillion won ($130 billion) of gold was on board”

The news very quickly attracted the attention of South Korea’s financial watchdog, the Financial Supervisory Service (FSS) who began to investigate “whether the company’s claims were part of any share price manipulation or other unlawful trade.”

A local news source also stated that FSS Governor Yoon Suk-heun said that the agency is investigating related “cryptocurrency issues.” This seemed to provoke a rapid change of heart by Shinil group who began backtracking rapidly on their alleged claims.

The source DToday reported again following a news conference in Seoul on Thursday that the FSS Governor said that the company had not reported the existence of gold, stating:

“The [unverified] reports said the Donskoi held 200 tonnes of gold but that would only be 10 trillion won [~$9 billion] at current value … We apologize to the public for the irresponsible citation.”

In a further twist to this tale of sunken gold coins and claims and counterclaims, Reuters reported on Thursday that Shinil Marine:

“…denied any connection with the cryptocurrency it said was run by a different company with the same name and said it had changed its name. A phone number on the cryptocurrency exchange’s website led to the company until last week.”

The exchange claims that that the coin and wallets have been developed and the token is due for listing on 10 exchanges between September and October this year. This includes the Shinil Group’s Donskoi international exchange.

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South Korean Regulators Move to Tighten Rules After Exchange Hacks

In response to two major hacks this year, including the Bithumb exchange attack this week, the South Korean government has acted quickly with a new bill aimed at tightening regulations for cryptocurrency exchanges.

Choi Jong-ku, chairman of the country’s top financial regulator, the Financial Services Commissions (FSC), responded to the most recent attack on Bithumb, suggesting that the cryptocurrency system needs more stability and strengthened protection.

Korean source Newspim accuses Korean regulators of allowing cryptocurrencies to be in a “blind spot”, suggesting that a reporting system would block certain cryptocurrency crimes such as money laundering and ensure scrutiny of banks with more care, ensuring virtual accounts are more closely monitored.

According to the government, the new bill introduced in response to the more frequent attacks on South Korean exchanges and “will define a virtual currency exchange as a virtual currency handling business” with a focus on money laundering, adding:

“If the bill passes the National Assembly, a virtual currency exchange must be obliged to report to the Financial Intelligence Unit (FIU) as a virtual currency handling business and be regularly supervised by the FIU.”

Any obvious transgression of current regulations will then be immediately investigated by Financial Supervisory Service (FSS) and the FIU. The Act on Reporting and Using Specified Financial Transaction Information has already been submitted to the National Assembly in order to achieve these outcomes and tighten up government monitoring of South Korean exchanges.

Other amendments to current legislation under the proposed bill will require companies to store data for five years relating to any financial transactions conducted, and heavy fines of KRW 30 million (USD 27,000) have been suggested for illegal activity. Sanctions are also favored in response to exchanges failing to comply with the regulators, including dismissal of executive staff and suspending businesses.

Currently, in South Korea anyone with USD 30 can launch a cryptocurrency trading platform and, until these recent changes, government agencies and financial authorities have not been permitted to strictly oversee digital asset businesses, according to Yahoo.

Park Yong-kin, a National Assembly Committee member commented at the end of last year that the government shouldn’t leave exchanges unregulated as it would worsen the cryptocurrency sector. It appears that his sentiments have now filtered through to the government after the recent spate of attacks on South Korea’s exchanges.

 

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