On January 26, 2026, at 8:00 AM UTC+8, South Korea's leading exchange Upbit designated Solare (SXP) as a "cautious trading project" in accordance with the agreement with DAXA, and simultaneously suspended deposit services, triggering a market alert. In the past 12 months, approximately 73% of projects that received similar warnings from DAXA were ultimately delisted, making this disciplinary action far from a typical operational adjustment, but rather a prelude to a life-or-death situation. The tension between the tightening compliance and self-regulation in South Korea and the increasingly constrained survival space for small and medium projects like SXP is becoming more pronounced in the South Korean crypto market.
Upbit Hits the Pause Button: SXP Under Review
● Trading Actions Escalate: According to public information, on January 26, 2026, SXP was unanimously designated by DAXA members as a cautious trading project, prompting Upbit to announce the suspension of SXP deposit services and initiate a project review. The practical effect is to "intercept" the project at the trading system's entrance, preventing new chips from entering while signaling high risk to existing users. This "lock the door first, then ask questions" approach treats SXP as a potential problem asset, pulling it out of the regular trading pool for observation.
● Three Possible Outcomes: Within Upbit's existing processes, this "cautious trading" designation is merely the beginning of the review cycle. Based on high-confidence information, there are roughly three possible outcomes: the first is to extend the observation period, which means continuing to list the project but keeping the risk label; the second is to lift the designation, allowing the project to resume normal trading status; the third is to terminate trading, meaning it would be officially delisted and exit Upbit's mainstream liquidity arena. The market is currently making rough and brutal predictions about the probabilities of these three outcomes based on price and sentiment.
● An Opaque Gray Area: What truly exacerbates uncertainty is that DAXA and Upbit have not disclosed the specific violation clues and triggering standards related to SXP. The outside world does not know whether it is a technical risk, compliance doubt, or project operation issue, making it impossible to assess the difficulty and timeline for rectification. In the absence of details and quantitative indicators, traders can only price based on the crude logic of "being warned = high risk," creating a typical regulatory black box: the market knows that a review exists but cannot evaluate the boundaries and tolerance space.
73% Warning Leads to Delisting: DAXA's "Better Safe Than Sorry" Logic
● High Hit Rate of Warnings: According to research briefs, in the past 12 months, approximately 73% of projects included in DAXA's "cautious trading" list were ultimately delisted. This ratio indicates that being pulled into this list is not a mere operational alert but closer to a "forewarning of judgment." For seasoned players adept at statistical historical cases, once SXP enters this pool, it is equivalent to being labeled as a "high probability delisting candidate," and the emotional response naturally exceeds that of ordinary market fluctuations.
● Paranoia Under Self-Regulatory Pressure: In the context of tightening local regulations in South Korea, DAXA assumes the role of "joint self-regulation of exchanges." When user losses, project explosions, or money laundering controversies occur, public opinion often first points to the exchanges, forcing them to adopt an extremely conservative risk preference. Under this pressure structure, " better safe than sorry " becomes a practical choice: it is preferable to take preemptive action against marginal projects, sacrificing some liquidity and trading income to reduce compliance risk exposure during post-event accountability.
● Multi-Party Pressure Reality: After SXP fell into this high-risk pool, pressure quickly accumulated from three parties. For the project team, the qualification for listing in this key South Korean market is suspended, raising questions about fundraising and ecological narratives; for token holders, there is concern that delisting could lead to a liquidity collapse, coupled with a lack of official information, leaving them to oscillate between panic and betting on a relisting; for the secondary market, SXP has become a typical "regulatory target," with emotional fluctuations amplified, where price movements are no longer solely determined by supply and demand and fundamentals but are deeply tied to regulatory expectations.
Regulatory Iron Curtain Tightens: A Survival Test for Project Teams
● Platform Role Transformation: From the recent compliance trends in South Korea, exchanges are transitioning from being traffic platforms that previously pursued trading volume and the number of listed coins to becoming risk gatekeepers responsible for pre-review functions. Under the DAXA framework, mainstream platforms are required to jointly maintain the market's "safety boundaries," conducting more stringent ongoing assessments of project technical architecture, governance structure, and compliance risks. Listing is no longer a one-time decision but enters a long-term management responsibility list.
● Punish First, Hold Accountable Later: Due to DAXA's review standards not being entirely transparent, project teams in the South Korean market face a governance structure akin to "presumed guilty": once certain internal risk control indicators are triggered, exchanges can take preemptive measures such as suspending deposits, designating as cautious trading, or even terminating trading, and then communicate with the project for rectification as needed. For project teams facing extreme information asymmetry, it is challenging to align with compliance red lines in advance, leaving them to passively endure high-pressure handling and then seek remedial space afterward.
● Listing Becomes a Long-Term Exam: The SXP incident has a direct demonstrative effect on other small and medium market cap tokens—in South Korea, listing on a leading exchange no longer means "safe landing," but rather the starting point of a long-term compliance exam. Code upgrades, governance adjustments, community operations, and even external communications must continuously align with local regulatory and self-regulatory alliance preferences; otherwise, they may be pulled into the cautious list at any time. For small and medium projects with limited funds, teams, and compliance resources, this ongoing examination itself constitutes a survival threshold.
A Market on Edge: Short Seller Frenzy and Bull Market Faith
● Emotional Tornado: Against this backdrop, Liquid Capital founder Yi Lihua proposed the view that " short sellers have entered the most frenzied dumping stage, but the fundamentals of the bull market remain unchanged," providing an accurate annotation for the current market atmosphere. On one hand, the regulatory turmoil surrounding cases like SXP provides perfect material for short sellers to amplify pessimistic narratives; on the other hand, some long-term bulls still insist that macro and industry fundamentals have not reversed, viewing such events as structural fluctuations within an upward cycle rather than a terminal signal.
● Short Seller Logic Exploiting Panic: Single-point risks like SXP are interpreted by short sellers as a precursor to "further tightening of South Korean regulations," spilling panic into a broader range of altcoin sectors and driving chips to pour out in fear. The opacity of regulatory actions and the historical 73% delisting probability provide ample narrative background for short sellers—even if the actual impact is limited to a few projects, the emotional spillover is sufficient to trigger a phase price collapse, creating a narrative of "using one project to illustrate a market-wide crisis."
● Structural Defense of Bulls: The bull camp emphasizes distinguishing levels: first, they believe the current bull market structure is more driven by macro liquidity, mainstream asset adoption, and institutional allocation, and that individual project regulatory events are insufficient to shake the foundation; second, they view SXP as a project-level black swan, rather than an industry-ending signal, advocating for separating risk events from long-term trends to hedge against emotional noise. Within this framework, SXP is more seen as a sample of compliance pressure testing rather than a judgment on the future of the entire crypto market.
On-Chain Anomalies and Derivatives Retreat: A New Order of Risk Preference
● On-Chain Funds More Cautious: On the same day as the SXP regulatory turmoil, a series of subtle changes also appeared on-chain. Research briefs indicate that OWL tokens experienced approximately $2.1 million in abnormal transfers, while various Perp DEX open interest generally declined, highlighting that funds are retreating from high-leverage, high-uncertainty positions. Although these events are not directly related to SXP, they collectively outline a key picture: under the combined shadows of regulation and emotional fluctuations, funds are becoming more defensive and cautious.
● Concentration of Leverage and Retreat: In the derivatives dimension, data points to Hyperliquid's open interest accounting for about 48%, indicating that leveraged positions are highly concentrated on a few platforms, while overall open interest is declining. This creates a seemingly contradictory scenario: on one hand, overall market leverage is retreating, indicating a cooling of overall risk preference; on the other hand, the remaining leverage is more concentrated in leading areas, meaning that risk is accumulating in smaller vessels, and once faced with new regulatory shocks or black swans, the chain reaction could be more severe.
● Repricing of Fund Preferences: Zooming back to the SXP incident, it can be seen that funds are reclassifying asset hierarchies: under the amplification of regulatory uncertainty, the market is more inclined to embrace high liquidity mainstream assets and compliance-friendly targets, while increasing the discount rate for small and medium-sized, story-driven, and regulatory-weak tokens. This preference shift is unlikely to be confined to South Korea but is more likely to spill over into other regions—exchange self-regulation, on-chain risk control, and institutional compliance will gradually tighten tolerance for marginal assets.
From SXP to the Entire Market: Who Can Survive the Self-Regulatory Storm
SXP being designated as a cautious trading project and having deposits suspended appears to be just an operational adjustment by Upbit, but in essence, it is another example of the tightening self-regulatory system of South Korean exchanges. Coupled with DAXA's record of approximately 73% of warning projects ultimately being delisted in the past 12 months, this incident serves as a collective warning to all small and medium projects: in a high-alert environment, any minor compliance or governance flaw could be magnified into a "iron fist" that determines life or death.
For project teams, the insight is harsh but clear: listing is no longer the endpoint but the starting line for long-term compliance operations; any single-point compliance error could evolve into a regulatory event under multi-party amplification, directly rewriting project valuation and survival trajectory. Moving forward, SXP under Upbit's review will likely have three paths: continue to be under observation, be lifted from designation to resume normal status, or be terminated and officially delisted. For investors, rather than focusing solely on price fluctuations, it is more prudent to pay attention to compliance signals, review progress, and the exchange's attitude, as these will be the core variables determining whether a project can weather the storm in the new round of self-regulatory cycles.
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