South Korea's 7th largest funeral service company incurs $327 million loss from Ethereum-themed stock Bitmine's daily double-leveraged ETF
South Korea's 7th largest funeral service company, "Bumo Sarang," invested 59.5 billion KRW in Ethereum-themed stock Bitmine's daily double-leveraged ETF last year, resulting in a loss of 49.3 billion KRW (approximately $32.73 million).
A review of the 2025 audit reports for 75 funeral service companies nationwide shows that 42.7% of companies have total assets below customer prepaid funds, making it impossible to fully refund if customers simultaneously request cancellation.
Prepaid customers in the South Korean funeral service market face refund risks, regulatory bodies are under pressure for thorough oversight, compliant funeral service companies benefit while high-risk leveraged investment firms face significant pressure, and customer funds are rapidly withdrawing from weakly regulated platforms.
Source: Public Information
ABAB AI Insight
"Bumo Sarang," as a leading company in the industry, invested customer long-term prepaid funds into high-leverage crypto ETFs. Previously, the South Korean funeral service (상조) industry was classified as a "prepayment installment trading business" rather than a financial institution, requiring only 50% reserve funds and lacking strict regulation on fund usage, leading many companies to misappropriate funds for cryptocurrency trading.
In terms of capital pathways, these companies chase high returns using customers' long-term deposited funds, but the bear market has resulted in huge unrealized losses that cannot cover redemption obligations. Some companies also engage in capital infusion to major shareholders, motivated by short-term performance boosts, ultimately creating systemic redemption risks.
Similar to the 2022 incidents where multiple South Korean companies faced crises due to Terra and other crypto investments, this comprehensive audit revealed that 42.7% of companies are insolvent. The South Korean funeral service industry is currently in a crisis phase transitioning from weak regulatory high-risk speculation to strict capital isolation and usage regulation.
Structural judgment: Essentially a regulatory change. Treating prepaid funeral funds as ordinary prepayments rather than trust funds has led to a lack of protection for customers' long-term funds. The mechanism is that in a low-interest-rate environment, companies chase leveraged returns, forcing regulation to evolve from lenient classifications to thorough capital adequacy and usage restrictions, thereby shifting customer fund safety from reliance on corporate self-discipline to mandatory regulation.
ABAB News · Cognitive Law
Customer long-term funds are most easily consumed by leverage.
As long as regulatory gaps exist, risks accumulate over the year.
The bear market reveals the true nature of weak regulation.