[Exclusive] 165 Disclosure Corrections at Top 5 Virtual Asset Exchanges... Coinone Says "No Data on Modification History" [Coin Lawless Zone]①

Opaque Disclosure Management in Virtual Asset Market
538 Investment Caution Designations, 394 Delistings in Five Years
Regulatory Gaps Worsen as Second-Phase Legislation Stalls

Editor's Note
While the second phase of virtual asset legislation (the Digital Asset Basic Act) remains stalled, institutional gaps have emerged across the market. The Asia Business Daily is conducting a five-part in-depth investigation into the regulatory voids and resulting risks throughout the virtual asset market, including disclosures, investigations of illegal transactions, recovery of criminal proceeds, and market surveillance.

"They immediately reported the hacking incident to overseas exchanges, but did not disclose or notify domestic exchanges and users, only making it public four days later. There is a strong possibility that they intentionally withheld disclosure and notification out of concern that the coin's price would fall." (Seoul Central District Court, May 30, 2025)

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In the virtual asset market, the disclosure system has lost its original function of protecting investors and is being exploited by issuers as a means of defending coin prices. Yet, it has been confirmed that major exchanges, which should be monitoring these practices, have virtually no management infrastructure in place.

According to data submitted to Assemblyman Min Byungdeok's office of the Democratic Party of Korea by the Financial Supervisory Service on July 5, a total of 165 disclosure corrections were made by domestic virtual asset exchanges between 2022 and May of this year. By exchange, Upbit accounted for the overwhelming majority with 117 cases, followed by Gopax with 39, Bithumb with 9, and Korbit with 0.

In particular, Coinone was found to have no disclosure management system whatsoever. Coinone stated, "We ask for your understanding that it is not possible to extract accurate statistics, as notice modification and deletion histories are not separately managed or datafied in our system." In the stock market, disclosure corrections or deletions are designated as unreliable disclosures, and if penalty points accumulate, this leads to strict expulsion rules such as trading suspension or delisting reviews. In contrast, the virtual asset market has been left in the dark.

Not only was disclosure management inadequate, but so too were listing and delisting procedures. Over the past five years, the five major exchanges designated a total of 538 coins as "cautionary items" for investors. By exchange, Coinone accounted for 196 cases, Bithumb for 150, Gopax for 90, Upbit for 53, and Korbit for 49. By year, there were 91 cases in 2022, 121 in 2023, 75 in 2024, and 141 last year. In the first five months of this year alone, 110 cautionary items were identified.

In reality, over the past five years, 394 coins were delisted (support for trading ended) and disappeared from the market. By exchange, Coinone accounted for 150, Bithumb for 114, Gopax for 67, Upbit for 39, and Korbit for 24. The most common reason given by domestic exchanges for delisting during this period was "project risk, such as foundation insolvency," with 155 cases. This was followed by "investor protection risk" with 108 cases, "market risk" with 56 cases, and "technical risk" with 50 cases.

The widespread lack of disclosure and repeated delistings in the virtual asset market are the result of the prolonged delay of the phase-two legislation, the Digital Asset Basic Act, which would provide overarching regulation for the market. Initially, financial authorities planned to announce a government bill with clear regulatory standards earlier this year, but this has been postponed indefinitely due to failure to reach consensus among regulators, lawmakers, and industry stakeholders. In particular, the financial authorities are considering allowing only consortia in which commercial banks hold "50% plus one share" or more to issue won-based stablecoins. However, the fintech (finance+technology) and virtual asset industries are demanding broader participation, arguing that a narrow scope would undermine competitiveness. On top of this, authorities are also discussing a plan to limit the maximum stake of major shareholders in virtual asset exchanges to 34%, further escalating the conflict.

The Digital Asset Basic Act, currently pending in the National Assembly, stipulates strong disclosure regulations. The bill states that an issuer wishing to issue digital assets must submit a report on the issuance to the Financial Services Commission, and cannot issue a digital asset until the report is approved, effectively blocking the unauthorized issuance of so-called "ghost coins." It also specifies that if any important information in the issuance report is false or omitted, and users of the digital asset suffer a loss as a result, those responsible must compensate for the damage. In addition, exchanges are required to establish work regulations, including criteria for supporting or terminating the trading of digital assets, and to make public disclosures accordingly.

Jung Myungho, senior expert advisor to the National Assembly’s Political Affairs Committee, evaluated in his legislative review report, "As systems related to digital assets are being established internationally, this bill is a necessary legislative measure, as it is recognized that Korea also needs to introduce a digital asset issuance system in order to foster a healthy blockchain industry ecosystem and enhance the global coherence of digital asset regulations."

However, some argue that applying the disclosure and delisting systems from the stock market directly to virtual assets is unrealistic. An industry insider who requested anonymity said, "In the case of small and medium-sized exchanges, they often lack bargaining power with foundations, so even if they request disclosure information, they frequently cannot obtain it." The high number of Coinone's delistings, they explained, is not a sign of market weakness but rather the result of cleaning up previously listed problematic coins in accordance with best practice standards for virtual asset trading support set by the Digital Asset eXchange Alliance (DAXA).

Experts point out that the current structure, which relies solely on self-regulation without legal oversight, has its limits. Hwang Seokjin, Professor at the International Graduate School of Information Security at Dongguk University, said, "The possibility of conflicts of interest at exchanges, non-standardized disclosure criteria, and the lack of effective sanctions combine to create vulnerabilities in terms of investor protection and market trust. It is important to design a regulatory system that reflects the unique characteristics of virtual assets by establishing shared responsibility between issuers and exchanges, ongoing disclosure obligations, the scope of important information, and effective sanctioning mechanisms."

Kim Minseung, head of the Korbit Research Center, said, "While maintaining self-regulation, a basic law for industry development is needed. If the first phase of legislation defined what is prohibited, the second phase should clearly define the legal boundaries of what is permitted to foster industry growth."

This content was produced with the assistance of AI translation services.