A local crypto exchange platform alliance on Friday decided to remove Paycoin tokens issued by PayProtocol, a subsidiary of payment service company Danal, on April 14.
The Digital Asset Exchange Alliance consists of five crypto exchanges, and PayProtocol's Paycoin is currently listed on three of them -- Bithumb, Upbit and Coinone.
Until recently, Paycoin had been expanding its business in the local market by enabling purchases with its token at over 150,000 merchants.
Paycoin’s mechanism is simple. When users purchase goods or services using Paycoin at local stores, Danal will make these transactions possible by paying cash to the stores and attaining users’ digital coins in return.
However, the business encountered a setback on Jan. 6 when the Korea Financial Intelligence Unit, under the Financial Services Commission, suspended its operations due to concerns about possible money laundering and other negative effects that could arise during the process of converting digital coins into cash.
This final suspension decision was the consequence of Paycoin failing to enforce real-name accounts by working with commercial banks by the end of last year, as the local financial watchdog had initially ordered.
To make matters worse, following the financial authority’s decision DAXA also designated Paycoin as a coin to approach with caution, citing that the coin issuers’ business became risky as its business model made it impossible to continue operation in Korea.
This is also the reason DAXA arrived at its decision to delist Paycoin later this month.
“After reviewing Paycoin’s sudden changes and its road map for overseas payment businesses, we say that there are investment risks," the three DAXA members announced via their platforms.
Paycoin immediately expressed regret over DAXA’s delisting decision, contending the move was unfair.
"We regret that the decision to delist has been made even though we provided detailed explanations about our overseas payment business road map and changes that will be made to our domestic payment business model,” Paycoin said in a statement.
The Paycoin issuer’s plan is to resume operations in Korea by partnering with a local bank and addressing all regulatory concerns by the fourth quarter of this year. It additionally aims to get listed on major cryptocurrency exchanges abroad.
Meanwhile, DAXA’s decision has sent another shock wave through a digital currency market here that has been suffering recently.
The operating profit of the largest coin exchange operator in Korea, Dunamu, plummeted last year, according to DART, the Financial Supervisory Service's electronic disclosure board on Saturday.
Dunamu's sales dropped 66.2 percent from the previous year to 1.24 trillion won ($949 billion) and its operating profit fell 75.2 percent on-year to 810.1 billion won.