The ban on initial coin offerings in South Korea will stay, the country’s financial regulator has said in a statement.

The decision by the South Korean Financial Services Commission (FSC) follows a survey which the regulator commissioned. Among the findings of the survey include the fact that some ICO projects misrepresented themselves. For instance, some had claimed to be fundraising abroad but they went on to involve South Koreans.

Dirty Tricks Employed to Evade ICO Ban

According to the FSC, the projects did this by registering in Singapore in order to circumvent South Korea’s ICO ban. Some of the evidence that the FSC obtained included marketing materials and white papers written in Korean.

The FSC has also accused some of the projects of concealing material information from investors including financial statements and company profiles. From the survey, the FSC also concluded that some projects also duped investors by offering false information.

Since the projects begun raising money, most of the investors are worse off than they started. On average the value of the tokens has declined by 67.7% on average since being launched.

FSC’s survey questionnaire was sent to some 22 local firms of which 13 responded. These firms managed to raise approximately $509 million. The ICOs were held starting in the second half of 2017.

Ban at the Height of the ICO Boom

South Korea banned ICOs in September 2017 citing the increased risk of fraud. The decision was made by Financial Supervisory Service following a meeting of a cryptocurrency task force it had instituted. Since then there have been various attempts to lobby for the legalization of the nascent funding model.

Last year in May, for instance, South Korea’s parliament recommended that domestic ICOs to be allowed in the country. This was as long as they adhered to relevant investor protections.

South Korea’s National Assembly Makes Official Proposal to Lift ICO Ban https://t.co/Gsut4HNp3S — CCN.com (@CCNMarkets) May 29, 2018

The recommendation by South Korea’s parliament to legalize ICOs was in response to reports that domestic firms were fleeing to friendlier jurisdictions such as Switzerland and Singapore. At the time South Korea’s parliament also called for blockchain and cryptocurrency-friendly legislation:

The administration also needs to consider setting up a new committee and building governance systems at its level in a bid to systematically make blockchain policy and efficiently provide industrial support. We will also establish a legal basis for cryptocurrency trading, including permission of ICOs, through the National Assembly Standing Committee.

The Financial Services Commission Unmoved by all the ‘Lobbying’

However, as the year wore on, it was becoming increasingly clear that the chances of legalizing ICOs were growing slimmer by the day. Last year in October, the chairman of the FSC, Choi Jong-ku, demonstrated hesitance despite the growing call for ICO legalization:

Although many people call for the government to allow initial coin offerings, there are still uncertainties related to such a move as well as the possibility of serious fallouts.