The Korean cryptocurrency exchange Zeniex is shutting down and has “abolished” it’s cryptocurrency fund and related token, ZXG.
According to a November 9th notice from the company:
“(A)ll services of Zeniex will be terminated on November 23, 2018.”
The exchange launched in May 2018 with the reported backing of Chinese internet security company Qihoo 36 and the support of Bishije and Jinse Chaijing crypto/blockchain media outlets.
In the November 9th release, the exchange says the decision to shut down came after it experienced “issues” with a second ZXG fund launch it had scheduled for October:
“…(W)ith recent issues regarding ZXG, we have gone through great deliberation both internally and externally…(and) have come to the conclusion that continuing to operate such service will be difficult.”
In the dedicated notice about the “abolished” ZXG fund and token, the company blamed, “…current pressure from the financial authorities”:
“ZXG was expected to be listed on crypto-exchanges overseas in order to continue the management of the fund. However, with recent developing issues we believe that ZXG Crypto fund No 1. is and will have difficulties to operate smoothly with such current pressure from the financial authorities…we feel heavy responsibility and have come to this unfortunate decision.”
The exchange says it will begin refunding ZXG token holders in an equivalent amount of Ethereum (ETH) tokens today, November 12th.
In the course of offering “Korea’s first cryptocurrency fund,” Zeniex seems to have run afoul of the Korean Financial Services Committee (FSC).
On October, Business Korea wrote that the Zeniex had started the fund and token without necessary permissions:
“(T)he virtual currency funds have never been registered in the Financial Supervisory Service, and their financial investment guide on their homepage has not been audited by the Financial Supervisory Service. None of the management company, sales company and the trustee have been approved by the Financial Services Commission.”
Zeniex also reportedly violated the Korean Capital Markets Act by failing to register with the Financial Supervisory Service and failing to file securities reports.
Investment funds in Korea must also be pre-approved by the FSC, must maintain, “…minimum capital for soundness,” and must abide by rules for the prevention of conflicts of interest, among other things.
Four days after the Business Korea report exposing Zeniex, Korean news outlet MK reported that Zeniex was cancelling its second ZXG fund launch because the FSC had, “commissioned the prosecution to investigate…violation of the Capital Market Law.”
According to a Zeniex release:
“The authorities are concerned that there is room for the illegality, so additional product launches will completely cancel the launch of the second product because it could lead to misunderstandings of investors and regulators.”
In lieu of the second sale, Zeniex said it would seek capital by trying to have the ZXG token listed on other token exchanges.
A search for the ZXG token at Coinmarketcap.com produces no results, which suggests that ZXG did not make it onto global token exchanges before it was abolished.
