The South Korean Financial Intelligence Unit is taking action against 16 foreign cryptocurrency exchanges for operating illegally in the country. “For illegal business activities of unregistered entities, a maximum penalty of 5 years in prison or up to 50 million KRW in fines can be imposed,” the regulator said.
16 foreign currency exchanges flagged by the South Korean regulator
The Financial Services Commission (FSC), South Korea’s largest financial regulator, announced Thursday that the country’s Financial Intelligence Unit (KoFIU) has notified investigative authorities about the illegal business activities of 16 unregistered Virtual Asset Service Providers (VASPs).
The KoFIU is South Korea’s Financial Intelligence Unit (FIU) and the Asian nation’s leading anti-money laundering and counter-terrorist financing (AML/CFT) agency.
The 16 entities are Kucoin, MEXC, Phemex, XT.com, Bitrue, ZB.com, Bitglobal, Coinw, Coinex, AAX, Zoomex, Poloniex, BTCEX, BTCC, Digifinex and Pionex.
The regulator said that all 16 cryptocurrency exchanges are located outside of Korea without an official local presence, adding that they have been found to engage in crypto business activities targeting local consumers. For example, they offer Korean-language websites, host promotional events aimed at Korean consumers, and offer a payment option that supports the purchase of crypto assets with credit cards in the country.
The Financial Intelligence Unit of Korea notified foreign crypto exchanges on July 22 last year that they must register their business with the authority. However, the above 16 entities continued to operate in South Korea without obtaining registration.
The agency stated in detail:
For illegal business activities of unregistered entities, a maximum of 5 years imprisonment or up to 50 million KRW [$38,000] Fines can be imposed with a restriction to register as a VASP in the local market for a certain period of time.
The regulator clarified that the financial authorities in the jurisdictions hosting the service providers will be notified and related credit card processing in the local market will be halted. In addition, “transfers of virtual assets to and from 16 unregistered entities will become impossible because the authorities have issued an administrative directive requiring the suspension of transactions between registered and unregistered entities,” the Korea Financial Intelligence Unit described.
The regulator stressed that “the authorities plan to take the necessary measures” to prevent crypto service providers from operating without registration in South Korea:
The Financial Intelligence Unit of Korea will continue to closely monitor the illegal business activities of unregistered entities and will continue to cooperate closely with the relevant authorities.
What do you think about the South Korean regulator taking action against cryptocurrency exchanges operating illegally in the country? Let us know in the comments section below.
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