According to recent data, the amount of debt owed by young people in South Korea is rising, and many of them are driven to bankruptcy court by their cryptocurrency investments.

A report on debt-related cases for the Financial Year 2023 was released by the Seoul Rehabilitation Court on April 5, according to Hankyoreh.

The authors of the paper reported a 31% increase in applications for "personal rehabilitation" in FY2023.

The authors observed that an increase in cases for individuals between the ages of 20 and 29 was being driven by "stock market purchases" and "crypto investment."

Youth in South Korea: Are Your Crypto Investments Wrong?

A report on the Personal Rehabilitation and Bankruptcy Case Statistical Survey is produced annually by the Seoul Bankruptcy Court.

This year’s report showed that 19,379 individuals applied for rehabilitation or bankruptcy in FY2022, up from 14,826 in FY2022.

If debtors agree to follow court-appointed repayment schedules, South Korea's rehabilitation system allows them to avoid filing for bankruptcy.

Courts handle bankruptcy procedures if they don't follow these plans.

Over the past three years, applications for personal rehabilitation from individuals in their 20s have "steadily increased," according to the Seoul Bankruptcy Court.

In the first half of 2021, 10.3% of rehabilitation applicants were aged 20-29. That number rose to 11% in the second half of 2021, then to 13.8% in the first half of 2022.

In the second half of 2022, the figure rose to 16.6%, climbing to 16.8% in the first half of 2023, and reaching 17% in the second half of 2023.

Per the court’s analysis, that rise is “the result of the expansion of economic activities for people in their 20s, including cryptocurrency and stocks.”

More Young People Turning to Crypto, Court Finds

The same court made similar observations in October 2023, when it claimed:

“A rise in [insolvency] among young people seems to have been influenced by a growth in economic activities such as cryptocurrency and stock market investment.”

Many have blamed rising property prices and high unemployment rates for rising South Korean youth disillusionment.

Some claim that foreign stock markets and cryptocurrency are their sole sources of financial hope. For young South Koreans, however, many financial counsellors claim that purchasing cryptocurrency is "no longer optional."

Judge Lee Seok-jun of the Seoul Bankruptcy Court wrote a report earlier this year advocating for increased regulation of cryptocurrencies.

According to Lee, cryptocurrency investors require greater security. He came to the conclusion that legislative oversights frequently leave courts unable to provide this.