TLDR
- South Korea’s Financial Intelligence Unit (FIU) is targeting several foreign crypto exchanges including BitMEX and KuCoin for operating without proper registration
- The exchanges are accused of running Korean-language websites and marketing to South Korean users without registering under the Specific Financial Information Act
- Authorities are considering access-blocking measures and sanctions against these platforms
- The crackdown affects BitMEX, KuCoin, CoinW, Bitunix, and KCEX, which face potential criminal penalties
- This follows previous regulatory actions in 2022 when South Korea blocked 16 unregistered exchanges
South Korean financial authorities have launched a crackdown on multiple foreign cryptocurrency exchanges operating in the country without proper registration. The Financial Intelligence Unit (FIU) has identified several platforms, including BitMEX, KuCoin, CoinW, Bitunix, and KCEX, for allegedly offering services to Korean users illegally.
These exchanges have been found operating Korean-language websites and targeting local investors with marketing and customer support. However, they have failed to register as virtual asset service providers (VASPs) under the country’s Specific Financial Information Act.
The FIU is now reviewing access-blocking measures for these overseas exchanges. They are consulting with the Korea Communications Standards Commission on how to implement these restrictions effectively.
“We are currently reviewing access blocking measures for unreported overseas exchanges that are providing services to domestic investors,” said an FIU official. The regulator is gathering data on damage cases to strengthen communication between authorities.
Under South Korean law, any company dealing with cryptocurrency trading, custody, or management must register with the FIU. Failure to comply can result in criminal penalties and administrative sanctions.
This crackdown is part of South Korea’s broader efforts to regulate the cryptocurrency market. The country aims to balance market growth with user protection.
The latest action follows similar measures taken in 2022. That year, the FIU requested the blocking of 16 unregistered foreign exchanges, including KuCoin, MEXC, and Poloniex.
Tightening the Crypto Net
Many exchanges withdrew from the South Korean market after those actions. According to the FIU, there are now only 31 registered crypto trading firms in South Korea, down more than 26% from 42 in 2024.
Several platforms like GDAC, ProBit, Huobi Korea, and Bitrade failed to renew their registrations. This led to their removal from the nation’s registry of approved crypto businesses.
The targeted exchanges have allegedly continued to serve Korean customers despite not meeting regulatory requirements. They have maintained Korean-language services and marketing campaigns aimed at local users.
South Korea’s regulatory focus extends beyond just registration issues. The country has also been working on strengthening anti-money laundering regulations in the crypto sector.
Recently, South Korean authorities announced plans to implement stronger anti-money laundering rules. These changes are part of a potential regulatory revamp focused on preventing financial crimes.
The country is also exploring other aspects of blockchain technology. The Bank of Korea plans to launch a central bank digital currency (CBDC) pilot program in April, which may last for three months.
At the same time, the central bank has rejected the idea of establishing a strategic Bitcoin reserve. They cited concerns about Bitcoin’s volatile nature and inherent risks as reasons for this decision.
South Korean crypto exchanges are facing additional scrutiny beyond the registration issues. On March 20, prosecutors raided Bithumb following suspicions that its former CEO, Kim Dae-sik, embezzled company funds to purchase an apartment.
Rumors have also emerged about intermediaries allegedly receiving payments to list projects on major Korean exchanges like Bithumb and Upbit. These allegations have prompted responses from the exchanges involved.
Upbit has demanded that media outlets disclose any list of digital asset projects that paid brokerage fees. This highlights the tense relationship between exchanges and regulators in the current environment.
The FIU expects to take “tangible measures” against the unregistered exchanges within this year. They are organizing cases and related data to prepare for enforcement actions.
As South Korea continues to develop its crypto regulatory framework, these actions against unregistered exchanges represent an important step in the government’s efforts to bring the industry under proper oversight.
