ICO ban in South Korea to be challenged in court by a Blockchain startup

The ICO ban in South Korea has been challenged many times, however it were just outcries against the governments, mostly from Blockchain companies, which were sometimes foreign. This time the  initiators of the “protest” is a local Blockchain startup called Presto, which has announced that no matter how people look at the ban, it is unconstitutional and that the company is ready totake this case to the court and “battle it out”.

The CEO of Presto, Kang Kyung-won has already commented on the matter saying that the ban doesn’t make sense, and that the government with the National Assembly are doing nothing about it. The fact remains that private companies are the ones responsible to spearhead the lifting of the ban and not oppositions in the parliament.

This could have all gone differently

The ban was quite unwarranted. The fact is that the government of South Korea sees ICOs as very risky, and although it had best intentions for investors in mind, it seems to have overlooked the possibility of just tightening regulations.

An ICO is when a crypto company sells it’s newest created tokens to the general public, in an effort to gain capital and then develop the tokens further. The population buys the token, in hopes that the price for it will increase in the near future. The problem with ICOs used to be the fact that pretty much everybody could do it. No matter the business plan or good intentions, which as you can see has prompted South Korea to ban it.

The fact remains the same as a potential tightening of the regulations could have been a better option, by requesting a clear white paper, a 10 year business plan and a guarantee of legitimacy, which would immediately lower the risk for the investors, but alas, South Koreans were stuck with an outright ban.

How it happened

The ban on ICOs was made in September 2017, so it has been quite a while. However, at the time the reason was completely different according to the vice head of the country’s financial watchdog. According to Kim Yong-Bum the authorities banned ICOs because of the potential damage they could have inflicted on the market. Saying that the investors were way too bullish about the whole ordeal. 

Presto now says that the ban was unconstitutional, which is easy to see why. Back in 2017 when the crypto market was literally exploding, it was quite the hit for crypto companies to be denied an ICO.

Who is Presto?

Presto turned out to be a company that is basically the support line for other crypto companies. Essentially it helps those companies create, develop and sell their own tokens. Furthermore, Presto features a decentralized crypto exchange which is then used as a platform by the other companies for listing their tokens.

The contracts formed with the crypto companies are called DAICO which is an abbreviation for “Decentralized Autonomous Initial Coin Offering”. This was an ideal solution for combating crypto companies who would ICO, make millions of dollars and then either mishandle it or completely disappear. The framework was made by Vitalik Buterin in January 2018.

Will the court-fight happen?

There is little leverage Presto can use against the government, the only hope it has is to gain at least some support from within. Some politicians of the South Korean government actually tried to have the ban “partially lifted” for research centers. The fact remains the same ,however, if there is nothing done about the ban, South Koreans can be missing an upcoming bullish market after the bear goes to sleep for the winter.

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Konstantin Rabin

About the Author: Konstantin Rabin

Konstantin has been working in the financial services industry since 2011. He is over-viewing various updates in the technology, regulation, and market movements. He's passionate about games and has a cute cat named Dog.

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