Key Takeaways

  • Korea’s Financial Intelligence Unit announced Thursday that it had found 16 foreign-based cryptocurrency exchanges operating illegally in the country.
  • The agency reported the unregistered exchanges to the investigative authority, took action to block domestic to their websites, and barred credit card companies from processing payments to them.
  • Major crypto exchanges like KuCoin, Phemex, and Poloniex were on the list of offenders.

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The unregistered crypto exchanges face up to five years in prison or fines of approximately $37,000 with a ban on future registration in South Korea.

Korea Cracks Down on Unregistered Crypto Exchanges

The Republic of Korea has threatened legal action against 16 unregistered crypto exchanges.

The Korea Financial Intelligence Unit (KoFIU) announced in a press release Thursday that it has reported 16 virtual asset service providers to the investigative authorities for operating without the necessary registrations in the country. According to the KoFIU, the 16 firms were found to have “business operations targeting Koreans without obtaining a registration,” including hosting and promoting Korean-language websites targeted at Korean consumers that allowed purchasing cryptocurrencies with credit cards. KuCoin, Phemex, and Poloniex were among the more extensive list of exchanges that are alleged to have operated illegally in the country.

The KoFIU said it had notified the foreign-based exchanges about the obligation to register with the Financial Services Commission in July last year, but allegedly none of them did. Now the financial watchdog has threatened to take legal actions, including reporting the unregistered firms to the investigative authority, requesting the Korea Communications Commission and the Korea Communications Standards Commission to block domestic access to their websites, and employing credit card companies to block crypto purchases through their payments services.

The agency also said it would inform the relevant authorities in the countries where the subject exchanges are based about their illegal operations in Korea and forbid all registered entities from processing transactions and interacting with them. According to the statement, the exchanges could face up to five years of imprisonment or civil penalties of up to $37,000 and a permanent ban from registering in the country.

Korean authorities began intensifying their probes in the domestic crypto industry after Terra’s $40 billion collapse in March. The Seoul-based Terraform Labs, including its Korean co-founders Daniel Shin and Do Kwon, are also subject to a criminal investigation under suspicions of fraud.

Disclosure: At the time of writing, the author of this article owned ETH and several other cryptocurrencies.

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