On Wednesday, South Korea’s Fair Trade Commission (FTC) ordered 12 domestic digital currency exchanges to make revisions to their user adhesion contracts. The regulatory body has reportedly investigated those exchanges and has identified more than a dozen contract terms that it considers unfair to customers, according to a report from Korea Joongang Daily.
That report suggests that regulators were focused on several key concerns arising from those contract provisions, but identified one particularly troubling issue:
“One of the regulator’s biggest complaints was with exchanges’ policy of converting users’ cryptocurrencies to cash if they haven’t logged in to their accounts in six months. Instead of converting the cryptocurrencies at the current market rate, they convert it at the rate the user originally purchased the cryptocurrency at.
The FTC said that the cryptocurrency is still the owner’s property, so exchanges have no right to convert it to cash. The regulator also ordered the exchanges to change their compensation policies. Some exchanges compensate users for losses with cryptocurrencies or points for the exchanges.”
The FTC declared that contract term invalid, since Korean law required that such payments be made only with recognized legal tender. According to regulators, these types of digital currency compensation payments can only be legally valid with both parties’ consent.
Other issues cited by the FTC include the distribution of advertisements to exchange customers, and the exchanges’ failure to accept any accountability for potential hacking attacks that could disrupt service or result in the exposure of sensitive customer information.
The Commission has given the twelve exchanges sixty days to change their contract terms and address regulators’ concerns.