South Korea eyes KuCoin, BitMEX in crypto exchange crackdown
South Korea’s financial landscape is undergoing significant scrutiny as authorities target various cryptocurrency exchange platforms for alleged non-compliance with local regulations. Reports from local media, including Hankyung, indicate that the Financial Intelligence Unit (FIU) of the Financial Services Commission is actively investigating several exchanges for failing to register as virtual asset service providers (VASPs) in alignment with the nation’s Specified Financial Information Act.
The FIU’s probe encompasses exchanges that reportedly catered to Korean users without the proper regulatory approval. Among these are notable names like BitMEX, KuCoin, CoinW, Bitunix, and KCEX. These platforms are said to have engaged in marketing activities and customer support for Korean investors while bypassing the required channels of compliance. According to South Korea’s stringent financial laws, operators involved in crypto sales, storage, brokerage, and management must maintain a reporting relationship with the FIU. Failing to do so can result in harsh consequences, including criminal penalties and administrative actions.
An FIU representative has confirmed that measures to restrict access to these identified exchanges are being contemplated. Consultations are underway with the Korea Communications Standards Commission, which oversees internet regulations, to devise strategies for enactment.
In tandem with these investigations into foreign exchanges, local cryptocurrency platforms are also facing their share of challenges. Reports surfaced that South Korean exchange Bithumb was raided by prosecutors earlier this week due to allegations that its former CEO, Kim Dae-sik, embezzled company funds to finance the purchase of an apartment. While authorities suspect violations of financial laws, Bithumb has asserted that Kim took out a loan to cover the funds.
Moreover, whispers of illicit practices regarding project listings have surfaced, particularly involving Bithumb and Upbit. Allegations suggest that intermediaries may have received substantial payments to facilitate the listing of certain projects. Upbit has challenged these claims, requesting the media outlet Wu Blockchain disclose the identities of any digital asset projects purportedly involved in such transactions.
With these ongoing investigations and heightened scrutiny from regulators, the South Korean cryptocurrency landscape appears poised for significant changes. Compliance will be paramount for exchanges aiming to operate within the regulatory framework set forth by South Korean authorities.
