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South Korean authorities are intensifying their regulatory oversight of cryptocurrency exchanges, focusing on platforms operating without proper registration as Virtual Asset Service Providers (VASPs). The Financial Intelligence Unit (FIU) of the Financial Services Commission is reportedly investigating several foreign-based exchanges, including KuCoin, BitMEX, CoinW, Bitunix, and KCEX, for allegedly servicing South Korean users without the required VASP registration.
- Regulatory Requirements: Under South Korea’s Specified Financial Information Act, cryptocurrency exchanges must register as VASPs with the FIU to operate legally. Failure to do so can result in criminal penalties and administrative sanctions.
- Allegations Against Exchanges: The exchanges in question are accused of offering services to South Korean investors, including marketing and customer support, without adhering to the country’s compliance protocols.
- Potential Sanctions: The FIU is considering measures such as blocking access to these unregistered exchanges. Discussions are underway with the Korea Communications Standards Commission to implement these restrictions effectively.
Domestic Scrutiny:
In addition to actions against foreign platforms, South Korean exchanges are under examination for potential financial misconduct. For instance, prosecutors recently raided Bithumb amid suspicions that its former CEO, Kim Dae-sik, misappropriated company funds to purchase real estate. Bithumb has stated that Kim secured a loan to repay the funds, addressing the allegations.
