New data reveals a concerning trend: the increasing debt among South Korean youth, fueled largely by investments in cryptocurrencies that are pushing many desperate young individuals towards bankruptcy proceedings.
According to a report from Hankyoreh dated April 5, the Seoul Rehabilitation Court has published findings on debt-related cases during the Financial Year 2023.
The report highlights a significant 31% surge in applications for “personal rehabilitation” during FY2023.
Researchers pointed out that investments in “crypto” and “stock market trading” were identified as major contributors to the escalating number of cases, particularly among individuals aged 20-29.
South Korean Youth: Crypto Investments Going Wrong?
The annual Personal Rehabilitation and Bankruptcy Case Statistical Survey report compiled by the Seoul Bankruptcy Court has shed light on the concerning trend of increasing applications for rehabilitation or bankruptcy.
According to this year’s report, there were 19,379 individuals who applied for rehabilitation or bankruptcy in FY2022, marking a notable increase from 14,826 in FY2021.
In South Korea, the rehabilitation system offers individuals unable to repay their debts an alternative to legal bankruptcy, provided they agree to adhere to court-assigned debt repayment plans. Failure to comply with these plans results in the initiation of bankruptcy proceedings by the courts.
The Seoul Bankruptcy Court highlighted a steady rise in personal rehabilitation applications from individuals in their 20s over recent years.
In the first half of 2021, 10.3% of rehabilitation applicants fell into the 20-29 age bracket. This percentage increased to 11% in the second half of 2021, then surged to 13.8% in the first half of 2022.
By the second half of 2022, the figure had climbed to 16.6%, further rising to 16.8% in the first half of 2023, and eventually reaching 17% in the second half of 2023.
The court’s analysis attributes this rise to “the expansion of economic activities for individuals in their 20s, including involvement in cryptocurrency and stock markets.”
More Young People Turning to Crypto, Court Finds
In October 2023, the Seoul Bankruptcy Court reiterated similar observations, suggesting that the surge in insolvency among young people appears to be linked to the increasing participation in economic activities such as cryptocurrency and stock market investments.
Rising property prices and high unemployment rates have been widely blamed for the growing disillusionment among South Korean youth. Many perceive their financial prospects as solely reliant on the opportunities presented by cryptocurrency and overseas stock markets. Consequently, numerous financial advisors assert that engaging in crypto investments is becoming a necessity for young South Koreans rather than an option.
Earlier this year, Judge Lee Seok-jun from the Seoul Bankruptcy Court advocated for stricter regulation of the cryptocurrency market. In a published paper, Lee emphasized the necessity for enhanced protection of crypto investors, highlighting the limitations faced by courts in providing such safeguards due to legislative gaps and oversights.
