HeyBit to Cease Virtual Asset Deposit Services in October
South Korean centralized finance (CeFi) company HeyBit announced on Monday that it will terminate its virtual asset deposit service, Harvest, on October 2 in line with regulatory guidelines.
Regulatory limitations
“Although we have made efforts to pay promised returns and provide stable digital asset investment products, we have ultimately decided to terminate the Harvest service in accordance with the policy guidelines of regulatory authorities,” the company said in a statement.
It further emphasized that the service termination is solely due to regulatory restrictions, rather than questions of financial integrity or credit issues, while also citing its judgment call that running a deposit business is practically impossible at the moment.
“Although some customers of other businesses have faced damages due to operational issues, the results of our due diligence report for the second quarter of 2023 were consistent with that of our last four reports, stating that the value of the assets we own exceeds that of deposited assets,” HeyBit said, seemingly referring to the recent class-action lawsuits against the Korean crypto platforms Haru Invest and Delio, who had unexpectedly suspended customer deposits and withdrawals, inciting KRW 50 billion (approximately $39 million at the time of the incident) in damages in the process. The company stressed that it was unrelated to this debacle and was securely storing all customer assets, alleviating potential investor concerns.
The company has thus been able to properly handle management operations involving promised returns, additional deposits, and withdrawals for Harvest users up until now.
However, it has decided to comply with the Virtual Asset User Protection Act, which is set to take effect next year in Korea. Article 7, Paragraph 2 of this act outlines that virtual asset companies must keep their own virtual assets and customers’ virtual assets separate, and they must own the same quantity and type of virtual assets — including deposited assets — as those that have been entrusted by customers.
“We are thus unable to use the assets entrusted to us by our customers as a source of return,” HeyBit said.
Planned rebound
Despite this setback, the company promised to resume services based on regulatory and policy changes in the future, including revamping virtual asset deposit services.
