BitMEX, KuCoin Among Exchanges Reportedly Facing Sanctions in S. Korea: Here’s Why
South Korean financial watchdogs are intensifying their scrutiny of international crypto exchanges, with a focus on enforcing strict compliance with local regulations. Recent reports from the Korea Economic Daily indicate that firms such as BitMEX, KuCoin, CoinW, Bitunix, and KCEX are among those allegedly operating unlawfully within South Korea.
### Sanctioning Non-Compliant Crypto Exchanges
The Financial Intelligence Unit (FIU) of South Korea’s Financial Services Commission has voiced concern over these foreign platforms, which have not registered as Virtual Asset Service Providers (VASPs) as mandated by the Specific Financial Information Act. The law requires entities involved in cryptocurrency trading and management to formally report their activities. Non-compliance constitutes illegal operation and could result in criminal charges and administrative sanctions.
These exchanges have also been criticized for providing services in the Korean language without adequate customer support or marketing geared toward South Korean investors. In light of these breaches, the FIU is actively probing their operations, collaborating with relevant organizations to devise a suitable approach to regulation. One potential measure under consideration includes blocking access to these unregistered exchanges.
> “We are currently reviewing blocking access to unreported overseas exchanges that are providing services to domestic investors through consultation with the Korea Communications Standards Commission. We are organizing damage cases and related data to strengthen communication between authorities, and we expect to see tangible measures taken within this year,” said an FIU official.
### Ongoing Regulatory Crackdown on Crypto Platforms
The current actions form part of a broader crackdown by South Korean authorities on the cryptocurrency sector. In September 2021, the FIU ordered over 60 exchanges that failed to meet local anti-money laundering (AML) regulations to shut down their operations. At that point, only four trading platforms—including Upbit, Bithumb, Coinone, and Korbit—remained compliant, while around 28 others obtained security certificates allowing them limited operations without won settlements.
In 2022, the FIU escalated its efforts by requesting the Korea Communications Standards Commission to restrict access to 16 additional overseas exchanges that did not register as VASPs. The regulatory body also collaborated with local credit card companies to obstruct crypto-related transactions from these non-compliant platforms.
According to a recent FIU report, the number of registered crypto firms in South Korea has fallen significantly to just 31, a decrease of 26% from the 42 firms reported in 2024. As the current investigation unfolds and sanctions are likely to be imposed, further reductions in the number of operational exchanges can be anticipated.
This rigorous enforcement of regulations underscores South Korea’s commitment to ensuring the safety and security of its financial ecosystem, as authorities seek to protect domestic investors and uphold important legal standards in the rapidly evolving crypto market.
