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Young South Koreans lured by cryptocurrencies struggle with bust after the boom

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In South Korea, young adults seeking financial freedom are falling into the craze over cryptocurrencies

NAMYANGJU, South Korea — Feeding into a national frenzy over cryptocurrencies, 24-year-old Juwon Park scraped together some of her savings, and in December, gambled $2,250 on the online investment sweeping South Korea.
Park, a former Google intern-turned-business writer, was riveted by a man on television who bragged that he transformed $80 into $23 million — all by trading in the virtual currency. It sounded too good to be true. And for Park, and others like her in South Korea pining for financial independence, it has been.
“I didn’t want a fortune,” she said last month on the first day of the Lunar New Year, a family-centric holiday celebrated across Asia.
“I just wanted enough to give me that glimmer of hope. Now it’s gone.”
Park, looking forward to one day moving out of her parents’ home outside of eastern Seoul and paying for graduate school, was taken on a ride: She watched as in a matter of a couple of weeks that initial investment grew to $3,200 before plunging suddenly by mid-January.
Her cryptocurrency accounts’ most recent worth: about $750.
A swift global downturn hammered South Korea’s crypto market in the beginning of 2018, spooking investors who have favored the digital cash as an alternative to — and potentially a replacement for — government-issued money. In recent months, countries have sought to regulate the hundreds of types of cryptocurrencies, which include the popular bitcoin, as well as rivals Ethereum Classic and Ripple.
The South Korean government has been so worried about the use of cryptocurrencies in illicit activities, such as money laundering, that it threatened to ban its trading outright.
A broader regulatory policy is still being devised, the government said last month. Some early initiatives have already been implemented in order to root out nefarious activity: Foreigners have been prohibited from taking part in South Korea’s domestic exchanges and anonymous accounts have been outlawed.
Whether tighter regulations will cripple the market entirely remains to be seen.
Recent studies show that American millennials have become more open to investing in cryptocurrencies over traditional government stocks or bonds. The obsession in South Korea, however, has become a next-level phenomenon thanks to the proliferation of brick-and-mortar crypto investment offices like Coinone and Bithumb, meetup groups and mobile apps.
A man watches a screen showing the prices of bitcoin at a virtual currency exchange office in Seoul, South Korea, on Jan. 16. Ahn Young-Joon / AP
When the government said it would move to regulate the market, more than 200,000 people signed an online petition in January asking lawmakers not to take away their “happy dream” of investing.
South Korea’s currency, the won, has been just behind the Japanese yen and the U.S. dollar in terms of market share for all bitcoin transactions worldwide, according to currency tracker CryptoCompare. Bitcoin, known as a “peer-to-peer electronic cash system,” was created in 2009 and experienced a record surge of $19,000 per bitcoin in December before its tumble in January.
“It’s a global trend, and [South Koreans are] indulging in being at the forefront of it,” said Elaine Ramirez, a Seoul-based tech journalist who writes about the crypto market. “On a macroeconomic level, it’s a way to gain greater opportunities when economic growth has been sluggish, and young adults see it as an escape from chronically high youth unemployment rates.”
For Park, who studied for several years in the United States and broadened her English, her dreams are not all that different from her American counterparts who hope to acquire their own homes and secure their financial futures. In South Korea, Reuters noted how cryptocurrency mania has taken hold of everyone from students to housewives.
Park had convinced her mother, Agnes Kang, a retired school teacher, to invest in cryptocurrency. Kang invested in the equivalent of $25,000 — and lost $12,000 before deciding to pull out completely in early January from an unforgiving market.
Park, having virtually lost a significant portion of her investment, said she has so little left in her Ripple and Ethereum Classic accounts that she doesn’t even bother checking on it regularly. She deleted one of her apps “for my sanity.”
“I am hoping that [after] this whole government regulation, once it gets sorted out, the price will normalize,” she said.
During a Lunar New Year lunch, she shared her frustrations with her parents and her younger brother, who has also tried his hand at crypto investing.
“The only money that’s truly yours is the money you sweat to earn,” Kang said in Korean over plates of egg-fried vegetables and kimchi.
“I wasn’t expecting 100 million won to fall from the sky,” Park told her family.
“For me, because prices were rising so quickly, I thought they’d keep rising once I bought in,” she continued. “Then I realized I’d been too greedy.”
In this rural part of Gyeonggi Province, where the skyscrapers of Seoul appear like some distant mirage, Park’s financial fears are so closely tied to the volatility of an internet market — a stark contrast from the cow farms and sweet potato sellers that surround her. She longs for the opportunities and escapism of the city, where she commutes three hours a day for her job.
Her parents can still rely on a national pension fund for their retirement. But what about her future? “I want to move out some day and get my own place in Seoul,” she said.
Jeong Soon-Hyeong, 29, is co-organizer of a community meet-up called Seoul Ethereum Meetup, and the CEO of the startup, Onther Inc. Brock Stoneham / For NBC News
South Korea, which consistently ranks as having the fastest internet speed in the world, offers a perfect launching pad for investing, said Seoul-based cryptocurrency adviser Jeong SoonHyeong, who started a meetup group three years ago that has grown from 14 members to more than 1,500.
“I think this tendency [to seek new, dynamic things], and the IT infrastructure, and the state of the economy have resulted in a craze for investing in cryptocurrencies,” Jeong said.
That same explosive level of interest has yet to cross into the mainstream in America, said Christian Catalini, an assistant professor at MIT Sloan School of Management who focuses on cryptocurrencies.
He estimates a few thousand people in the U.S. are investing in the nascent crypto market, with it relegated to mainly tech-savvy early adopters and others in the Silicon Valley-minded crowd. While U.S. lawmakers and federal agencies have started looking into illicit digital currency activities and so-called initial coin offerings, any tangible move toward regulatory oversight remains unclear.
The governor of England’s central bank said Friday that he will call for more regulation in the United Kingdom in order to bring the era of cryptocurrency “anarchy” to an end.
Back in South Korea, Park remains tepid on cryptocurrencies. She once described them as a “life jacket” for young adults, but now she thinks she’s “swimming hopelessly.”
On Lunar New Year, amid a day of relaxing with her family, she was tempted to check one of her cryptocurrency accounts. It was up, she told her family excitedly, to just over $1. (-NBC News)

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