November 28, 2024

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The paycoin app (PayProtocol)

Paycoin, the cryptocurrency issued by PayProtocol, was delisted from three major virtual asset trading platforms in South Korea after the issuer's petition for a preliminary injunction against the removal was rejected by a Seoul court on Friday.

PayProtocol, a subsidiary of payment service company Danal, filed the petition on April 8, after the Digital Asset Exchange Alliance (DAXA) -- consisting of five major crypto exchanges-- announced on March 31 that it would stop trading paycoin on Bithumb, Upbit and Coinone from April 14.

The court upheld DAXA's reason for the delisting of paycoin. DAXA asserted that PayProtocol failed to put forward a plan for overseas services to offset the losses incurred after being suspended from running its service in Korea.

Paycoin’s mechanism in Korea is simple. When users purchase goods or services using paycoin at local stores, Danal make these transactions possible by paying cash to the stores and attaining users’ digital coins in return.

Paycoin had been gaining momentum in the local market with this service at over 150,000 merchants, but 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.

Previously, PayProtocol failed to comply with the local financial watchdog's initial order to enforce real-name accounts by working with commercial banks before the end of last year.

Consequently, those who invested their money in paycoin on three of DAXA members' exchanges -- Bithumb, Upbit, and Coinone— are now left with no choice but to withdraw their coins or transfer them to foreign exchanges.

Upbit and Bithumb will allow clients to withdraw paycoin until May 14 and 15, respectively. Coinone investors have to withdraw their coins a bit earlier by April 28.

Following the ruling, PayProtocol announced that it plans to mitigate any inconvenience to investors by listing the coin on foreign cryptocurrency exchanges.

Meanwhile, previously, Wemade's wemix tokens were relisted on Coinone just two months after being removed from four crypto exchange platforms similar to paycoin.

Wemix was delisted for lack of transparency and filing false information.

However, it is unlikely that paycoin will follow wemix's footsteps, as DAXA has created a new rule that suspends relisting for certain periods.

While DAXA has not specified the waiting period for relisting, industry sources say that paycoin could remain delisted for at least a year.

By Song Seung-hyun (ssh@heraldcorp.com)