Approval for Fractional Investment OTC Marketplace Halted Amid Controversy... FSC Postpones Preliminary Review

The Financial Services Commission has postponed the final approval review for the over-the-counter (OTC) marketplace for fractional investment. This move appears to be a result of Lucentblock raising concerns over the fairness of the process.

According to financial authorities on January 14, the Financial Services Commission did not include the 'preliminary approval application for the OTC marketplace for fractional investment' on the agenda of its regular meeting that day.

On January 7, the Securities and Futures Commission under the Financial Services Commission had reviewed and resolved the preliminary approval application for the OTC marketplace for fractional investment, and it was expected to be discussed at the regular meeting. However, the discussion has been postponed to a future meeting.

Initially, the Securities and Futures Commission reportedly selected the 'KDX Consortium' led by Korea Exchange (KRX) and the 'NXT Consortium' led by Nextrade (NXT), while the Lucentblock Consortium was effectively eliminated. The Financial Services Commission had previously stated that it would select up to two out of the three applicants for the OTC marketplace business license.

This postponement is believed to have been influenced by Lucentblock's public challenge to the fairness of the preliminary approval process at a press conference held on January 12.

At that time, Lucentblock CEO Heo Seyoung argued, "Administrative procedures and the restructuring of the market around vested interests during the institutionalization process completely contradict the intent of the legislation," claiming that the approval process lacked fairness. He also raised suspicions that NXT, after signing a non-disclosure agreement (NDA) with Lucentblock prior to applying for the business license, misappropriated Lucentblock's technology.

Lucentblock has expressed its understanding of the financial authorities' decision and stated its willingness to actively participate in any additional procedures. CEO Heo Seyoung said, "We understand the intention behind the financial authorities' careful review," and added, "If there are any additional requirements during the re-examination or final announcement process, we will faithfully comply with the relevant procedures and actively cooperate."

He further stated, "We hope that, through this review process, the original intent of the Special Act on Financial Innovation Support and the purpose of introducing the system will be fully reflected in the final outcome."