South Korean authorities are cracking down on cryptocurrency exchanges operating illegally, with tough sanctions expected for non-compliant platforms.
Investigates Unauthorized Crypto Exchanges
The Financial Intelligence Unit (FIU) of the Financial Services Commission is reportedly considering measures against a number of foreign-based crypto exchanges suspected of servicing Korean users without the required Virtual Asset Service Provider (VASP) license.
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The local media reports, that the FIU is scrutinizing exchanges such as KuCoin, BitMEX, CoinW, Bitunix, and KCEX.
These platforms allegedly provided customer support and marketing services tailored for South Korean investors while bypassing the country’s compliance framework.
Under South Korea’s Specified Financial Information Act, cryptocurrency platforms engaging in activities like trading, storage, or brokerage must register as VASPs with the FIU. Failing to do so is deemed illegal, carrying both criminal and administrative penalties.
Authorities are now evaluating countermeasures, including blocking access to the non-compliant exchanges. The FIU is reportedly discussing implementing these restrictions with the Korea Communications Standards Commission.
Local Exchanges Also Under Scrutiny
Regulators aren’t just targeting foreign platforms—domestic exchanges are under scrutiny, too. Earlier this week, prosecutors raided Bithumb, one of South Korea’s top exchanges, over allegations that former CEO Kim Dae-sik embezzled company funds to buy an apartment.
Meanwhile, reports surfaced that intermediaries were allegedly paid large sums to secure token listings on major exchanges like Bithumb and Upbit. In response, Upbit challenged the media to disclose which digital asset projects had paid brokerage fees.
On the Flipside
- KuCoin and BitMEX, while prominent on the global stage, hold a relatively minor position within South Korea’s crypto exchange market, predominantly dominated by domestic platforms such as Upbit, Bithumb, and Coinone.
- South Korea is tightening crypto regulations to prevent illicit activities and ensure compliance within the market.
Why This Matters
South Korea’s actions highlight the country’s efforts to enforce crypto regulations and ensure compliance. Targeting both foreign and domestic exchanges reflects a broader approach to maintaining transparency and oversight in the cryptocurrency market.
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