Authorities in South Korea are reportedly exploring measures to block cryptocurrency exchange platforms that might be operating without complying with the standards set forth by the nation’s financial regulatory body.
On March 21, local outlet Hankyung noted that the Financial Intelligence Unit (FIU) from the Financial Services Commission is contemplating penalties against these platforms for allegedly functioning within the country without proper registration as operators.
In accordance with the Specified Financial Information Act, South Korean authorities mandate that crypto exchanges must register as virtual asset service providers (VASPs) with the relevant regulators.
The FIU is currently evaluating a list of exchanges and coordinating with pertinent agencies. The regulator is also considering punitive actions, including restricting access to these exchanges as part of their response strategy.
The regulator is expected to enforce stricter measures against exchanges purportedly servicing South Korean customers without the necessary VASP documentation. The exchanges under investigation are alleged to have offered marketing services and customer assistance to local investors without following the proper compliance protocols. Hankyung reported that the exchange KuCoin was among those identified, along with several other platforms. A spokesperson for KuCoin stated: “We are vigilantly observing regulatory changes in all areas, including Korea. At KuCoin, we emphasize that compliance is vital for the healthy and sustainable expansion of the crypto sector—this has always been our viewpoint and will continue to influence our direction as we progress. We are dedicated to fostering the industry’s long-term growth through proactive and responsible initiatives.” According to local laws, operators involved in crypto sales, storage, brokerage, and management must report to the FIU. Failure to comply could result in the exchange’s activities being deemed illegal, resulting in potential criminal charges and administrative penalties. An official from the FIU mentioned that options to restrict access to the listed exchanges are currently under review. The official also stated that consultations are taking place with the Korea Communications Standards Commission, which regulates internet access, to determine how access to these exchanges can be blocked. Related: Wemix denies cover-up amid delayed $6.2M hack announcement Besides foreign exchanges, domestic platforms are also facing increased examination over allegations and rumors of financial improprieties. On March 20, prosecutors conducted a raid on Bithumb amid claims that its former CEO, Kim Dae-sik, misappropriated corporate funds for personal expenditures such as purchasing an apartment. Authorities suspect violations of financial regulations may have occurred during this transaction. However, Bithumb contended that Kim had secured a loan to repay the misallocated funds. Moreover, allegations regarding intermediaries receiving payments to facilitate project listings on Bithumb and Upbit have emerged. Citing anonymous sources, Wu Blockchain reported that entities claimed to have paid intermediaries substantial sums for these listings. Upbit responded by requesting that the media outlet disclose the identity of the digital asset projects that allegedly paid these fees. Magazine: Crypto enthusiasts are fascinated with longevity and biohacking: Here’s why
Scrutiny of crypto exchanges in South Korea
Increased scrutiny on South Korean exchanges