Crypto Chaos in South Korea: Exchanges Face Possible Closure & Hefty Fines

Crypto Chaos in South Korea: Forced Shutdowns Incoming?

According to reports, South Korean officials are investigating the possibility of shutting cryptocurrency exchange platforms that might have functioned outside of the guidelines established by the nation’s financial regulator. The Financial Services Commission’s Financial Intelligence Unit (FIU) is reportedly exploring fines against cryptocurrency exchanges for allegedly operating in the nation without disclosing their status as operators to the relevant authorities, according to a March 21 article by local media outlet Hankyung.

BitMEX, KuCoin, and More Under Fire in South Korea’s Crypto Compliance Sweep

Under the nation’s Specified Financial Information Act, South Korean financial authorities mandate that cryptocurrency exchanges register with regulators as VASPs. In addition to consulting with relevant agencies, the FIU is looking into a number of exchanges. As they start to develop countermeasures, the regulator is also thinking about fines, such as preventing access to exchanges.

BitMEX, KuCoin, CoinW, Bitunix, and KCEX are among the exchanges on the list that are accused of offering services to South Koreans without the necessary VASP paperwork. According to reports, exchanges offered Korean investors marketing and customer service without following the nation’s regulatory procedures. Operators of cryptocurrency sales, storage, brokerage, and management are obligated by national legislation to report to FIU. Exchanges’ operations will be deemed unlawful and subject to both administrative and criminal penalties if they fail to comply.

South Korea Investigates Crypto Exchanges: Illegal Payments & Fraud Alleged

South Korean cryptocurrency exchanges are also under investigation due to rumors and allegations of financial malfeasance, in addition to overseas exchanges. On suspicion that Kim Dae-sik, the company’s former CEO, embezzled corporate funds to buy an apartment, authorities raided Bithumb on March 20. The exchange and its management may have broken several financial regulations during the condo acquisition, according to the authorities.

There have also been reports of intermediaries receiving payment to list projects on Upbit and Bithumb. Wu Blockchain reported that projects allegedly paid intermediaries millions of dollars to be listed on the exchanges, citing unnamed sources.

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