South Korean funeral companies embezzled clients' funeral expenses! Heavy investment in Bitmine leveraged ETFs resulted in a disastrous loss of 33 million USD

South Korean funeral industry operators have invested $40 million in prepaid funds into leveraged ETFs, suffering losses of more than eight times the principal. The tragedy exposes regulatory loopholes in funeral funds, and the parliament is accelerating legal reforms.

According to South Korean media outlet 《한국경제》, Bumo Sarang, the seventh-largest funeral services provider in South Korea (Bumo Sarang, meaning “parental love”), invested about 59.5 billion won (about $40 million) of customer prepaid funeral expenses into a 2x leveraged ETF that tracks the BMNR stock price, and by the end of 2025 its book loss exceeded $33 million—more than eight times the principal. Not only did it severely damage consumer confidence, but it also revealed the reality that prepaid funeral funds in South Korea operate in a regulatory gray area.

Bumo Sarang bets on the 2x leveraged BMNR ETF, turning eight times the principal to dust

According to the 2025 audit report Bumo Sarang submitted to the Korea Fair Trade Commission, the company invested all 59.5 billion won (about $40 million) of customer prepaid funds into the U.S.-listed “T-REX 2X Long BMNR Daily Target ETF.” The product tracks twice the return of Bitmine Immersion Technologies (BMNR) stock price and is a high-leverage, high-risk daily rebalancing ETF.

By the end of 2025, the position’s book value had shrunk to only 10.2 billion won (about $6.8 million), with a book loss as high as $33 million. Bumo Sarang claims that this round of losses is “temporary market volatility,” that the company’s financial buffer is sufficient to absorb the loss, and that there is currently no plan to sell the position.

Double blow: Ethereum’s sharp drop plus volatility decay

People in the crypto industry are no strangers to the name Bitmine. As an Ethereum reserve company (DAT) that primarily holds Ether (ETH) as its reserve asset, Bitmine’s stock performance can be described as highly volatile. The major fall in Ether this year has directly dragged down Bitmine’s stock. Since the $135 peak in June last year, it has already dropped by more than 85%.

On top of that, in a choppy market, a 2x leveraged ETF also experiences “volatility decay.” Even if the underlying asset’s price eventually returns to its starting point, ongoing up-and-down fluctuations will keep shrinking the leveraged ETF’s net asset value. Combined, these two factors have caused principal losses far exceeding expectations.

Regulatory gray area exposed, customer fund protection rendered meaningless

What has shocked the public most is the fundamental regulatory flaw in South Korea’s prepaid funeral funds. At present, this industry is not governed by financial regulators. Instead, it falls under the jurisdiction of the Fair Trade Commission under the name of a “prepaid installment payment business,” outside the framework of financial consumer protection.

Current regulations only require operators to keep 50% of customer prepaid payments as reserves, while the remaining 50% can be freely used—even for investing in high-risk securities. After investigating 75 funeral operators, 《Korea Economic Daily》 found that 43% of their existing assets are below the total amount of customer prepaid payments they owe, indicating that financial risk is widespread across the industry.

Six bills pending in parliament, regulatory reform pressure mounting

The public outcry triggered by the Bumo Sarang incident has already prompted the South Korean parliament to accelerate efforts to pass legislation. Currently, six bills are under review in parliament. The main directions include banning funeral operators from making speculative investments with customer prepaid funds and restricting lending of funds between related companies.

However, before the bills are officially passed, the fate of Bumo Sarang’s customer funds still depends entirely on the future movements of Bitmine’s stock price and Ether. Analysts warn that if a comprehensive regulatory mechanism is not established promptly, similar incidents could happen again, with the ultimate victims being ordinary people.

• This article is reprinted with authorization from: 《Chain News》
• Original title: 《South Korean funeral company misappropriates customer prepaid funeral expenses, heavily invests in BMNR leveraged ETF and suffers a $33 million loss》
• Original author: Crumax