Top Cryptocurrency News: Korean Regulator Takes Action Against 16 Foreign Crypto Exchanges

The South Korean financial intelligence agency has launched 

an investigation into 16 foreign cryptocurrency exchanges that are operating illegally in the country.

 According to the regulator, illegal business activities of unregistered firms can result in a maximum of 5 years in prison or a fine of up to KRW 50 million.

The Financial Services Commission (FSC) of South Korea announced on Thursday that the country's financial intelligence unit (KoFIU) has alerted investigative authorities about the illicit business practices of 16 unregistered virtual asset service providers (VASPs).

The KoFIU is South Korea's financial intelligence unit (FIU) and the Asian country's principal agency for anti-money laundering and counter-terrorism financing issues.

The 16 entities include Kucoin, ZB.com, Bitglobal, Coinw, Coinex, AAX, Zoomex, Poloniex, BTCEX, BTCC, MEXC, Phemex, XT.com, Bitrue, Digifinex, and Pionex.

According to the regulator, all 16 crypto exchanges are headquartered outside of Korea and do not have a legal domestic presence. They were also discovered to be participating in crypto business operations aimed at domestic consumers. For example, they create Korean-language websites, host promotional events aimed at Korean customers, and give a payment option that allows for the purchase of crypto assets in the nation using credit cards.

On July 22, 2021, the KoFIU informed foreign-based crypto exchanges that they needed to register with the government. However, the 16 aforementioned entities continued to function in South Korea without being registered.

The authority detailed that “for illegal business activities of unregistered firms, a maximum of 5 years in prison or a fine of up to KRW 50 million [$38,000] can be enforced, with a limitation on registering as a VASP in the domestic market for a specific period of time.”

The regulator added that financial authorities in the countries hosting the service providers would be notified, and related credit card processing in the domestic market will be suspended. Furthermore, transfers of virtual assets to and from the 16 unregistered businesses will be prohibited since the authorities have issued administrative guidelines ordering the suspension of transactions between registered and unregistered entities, according to the KoFIU.

The regulator emphasized that the authorities intend to take the appropriate steps to prevent crypto service providers from operating in South Korea without registration: “The KoFIU will continue to actively monitor illicit business operations conducted by unregistered firms and will work closely with relevant authorities.”

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