The Financial Intelligence Unit (FIU) of South Korea’s Financial Services Commission (FSC) has started a crackdown on unregistered overseas crypto exchanges operating in South Korea.
Under the regulatory act, Korean users are facing the possibility of losing access to 16 cryptocurrency exchanges for their illegal operations in the country.
FSC Goes to Work
The FSC has taken action on the unregistered Virtual Asset Service Providers (VASPs) and requested the investigative authority to block domestic access to their domains.
The list of 16 exchanges includes KuCoin, MEXC, Phemex, XT.com, Bitrue, ZB.com, Bitglobal, CoinW, CoinEX, AAX, ZoomEX, Poloniex, BTCEX, BTCC, DigiFinex, and Pionex.
The Korean financial watchdog notified that the platforms had targeted Korean customers through the Korean-language website and promotional campaigns stimulating consumer demand.
All of these activities are subject to the Financial Transactions Report Act and thus are required to carry out relevant registrations.
Not having a relevant license is illegal, which results in civil penalties including a maximum of 5 years in prison or a maximum fine of 50 million Korean won (US$37,000).
The Korean authorities’ scrutiny of the crypto market has increased since the catastrophic event of the Terra ecosystem. As a result, authorities are clamping down on foreign businesses operating without authorization.
The two leading financial regulators in Korea, the Financial Services Commission (FSC) and the Financial Supervisory Authority (FSS), have brought back the economic task force in the effort to investigate Terra.
The Korean police did everything they could to put a freeze on the assets of the Luna Foundation Guard, the organization that spent up to $3 billion in Bitcoin in just three days in the desperate effort to save Terra.
However, they were unsuccessful. Terraform Labs is still under investigation by the Seoul Metropolitan Police Department for allegations of embezzlement.
The FSS recently ordered an investigation of domestic banks over concerns that they exploited the “Kimchi Premium” vulnerability to transfer $6.5 billion in remittances.
Do Kwon Under Investigation
It was recently reported that Do Kwon is preparing to return to Korea, the country he was forced to flee because of the collapse of Terra.
The CEO of Terra would have hired a lawyer from a law firm in South Korea as a preparation for an investigation from the country authorities.
Reports from local media indicate that CEO Do Kwon recently dispatched a letter to a lawyer working for the Seoul Southern Prosecutor’s Office. This is the division that is currently directly examining the downfall of the Terra Classic.
The move of the founding figure of Terraform Labs shows the ability to be ready to face the authorities after a long time of hiding.
Recently, Do Kwon came out of his silence and participated in an interview with Coinage Media. For his first interview since the collapse of Terra, the CEO of Terra Labs acknowledges major strategic errors.
In response to the question of whether he defends himself from accusations of fraud around his blockchain, he says he is ready to assume the consequences of the fall of the collapse of Terra. Do Kwon, however, stated that he did not receive any charges and communications against him.
The man does not appear to have a spotless record in the eyes of the South Korean justice system. The authorities conducted an investigation and gathered evidence from 15 entities, including seven crypto exchanges connected to the Terra event, all of which have since gone bankrupt.
At the same time, the South Korean authorities also commented that most Terraform Labs personnel are prohibited from leaving Korean territory.
Do Kwon is currently being asked to testify before the National Assembly of Korea, according to a request from Congressman Yun Chang-Hyun. Not only that, but Kwon will have to prepare for a series of lawsuits from Korean investors.