South Korea has been cracking down on unregistered overseas crypto exchanges that have been operating illegally in the country. The Financial Intelligence Unit (FIU) of the Financial Services Commission has initiated efforts to target several foreign platforms that have been providing services to Korean users without registering as Virtual Asset Service Providers (VASPs) under the Specific Financial Information Act.
According to reports, the FIU has identified popular crypto exchanges such as BitMEX, KuCoin, CoinW, Bitunix, and KCEX as part of its investigation. These platforms have been offering Korean-language websites, marketing efforts, and customer support specifically targeting local investors, all without adhering to Korea’s VASP registration requirements.
Under current regulations, any entity involved in virtual asset trading, custody, or brokerage in South Korea must formally register with the FIU. Failure to comply is considered illegal and can result in criminal penalties and administrative sanctions. As a potential enforcement measure, authorities are considering blocking access to these platforms.
The FIU is currently in discussions with the Korea Communications Standards Commission (KCSC) to implement website blocks and further restrict the exchanges’ operations within the country. This is not the first time South Korea has taken action against unauthorized crypto firms. In 2022, the FIU requested the KCSC to block access to 16 unregistered foreign exchanges and collaborated with domestic credit card companies to prevent cryptocurrency-related transactions.
In a recent development, South Korean prosecutors launched a formal investigation into Bithumb, one of the largest cryptocurrency exchanges in the country. The investigation is centered around allegations that company funds were misused to facilitate an apartment purchase for its former CEO. The Seoul Southern District Prosecutors’ Office also conducted a search and seizure operation at Bithumb’s headquarters in Yeoksam-dong.
Last year, the number of cryptocurrency investors in South Korea surpassed 15 million. Data from the Bank of Korea revealed that 15.59 million South Koreans held accounts on the nation’s top five cryptocurrency exchanges by the end of November. Additionally, deposits in crypto exchanges doubled from 4.7 trillion won ($3.2 billion) in October to 8.8 trillion won ($6.03 billion) in November.
The crackdown on unregistered overseas crypto exchanges by South Korean authorities underscores the importance of regulatory compliance in the rapidly evolving cryptocurrency market. The efforts to enforce regulations and prevent illegal activities within the crypto space are crucial for protecting investors and maintaining the integrity of the financial system.