South Korean authorities are reportedly looking into blocking crypto exchange platforms

input: South Korean authorities are reportedly looking into blocking crypto exchange platforms that may have operated without adhering to the requirements

South Korean financial authorities are reportedly looking into blocking crypto exchange platforms that may have operated without adhering to the requirements set by the country’s financial regulator.

Local media Hankyung reported on March 21 that the Financial Intelligence Unit (FIU) of the Financial Services Commission is considering sanctions against crypto exchanges for allegedly operating in the country without reporting as an operator to the appropriate regulators.

South Korean financial authorities require crypto exchanges to report to regulators as virtual asset service providers (VASPs) under the country’s Specified Financial Information Act.

The FIU is investigating a list of exchanges and is conducting consultations with related agencies. The regulator is also considering sanctions, such as blocking access to the exchanges, as they begin to prepare countermeasures.

The regulator will reportedly crackdown on exchanges allegedly providing services to South Koreans without the appropriate VASP reports. The exchanges in the FIU’s list reportedly provided marketing and customer support to Korean investors without going through the country’s compliance process.

Local media Hankyung mentioned that the crypto exchange KuCoin was on the list along with other crypto platforms. In a statement, a KuCoin representative told Cointelegraph:

“KuCoin has not yet applied for a VASP registration in South Korea. We are closely monitoring the developments in the market and will consider applying for registration if the conditions are suitable for our business model.”

The report comes amid a wider crackdown on foreign crypto exchanges operating in the country without the proper registration.

Earlier in March, the Seoul Southern District Prosecutors’ Office launched an investigation into Binance for allegedly continuing to provide services to South Korean investors despite being ordered to halt operations in 2021. The regulator reportedly ordered Binance to cease operations as it failed to register as a VASP.

The FIU is considering measures to block access to the exchanges included in the list. An FIU official said in the report that they are currently consulting with the Korea Communications Standards Commission, the regulator in charge of the internet, on how they can block access to the exchanges.

If exchanges don’t comply, their business will be considered illegal and subject to criminal penalties and administrative sanctions.

Apart from foreign exchanges, South Korean exchanges are also facing scrutiny over suspicions and rumors of financial misconduct.

On March 20, prosecutors raided Bithumb following suspicions that its former CEO, Kim Dae-sik, embezzled company funds to purchase an apartment. The authorities suspect that the exchange and its executive may have violated some financial laws during the apartment purchase. However, Bithumb responded that Kim already took out a loan to repay the funds.

In addition, rumors of intermediaries getting paid to list projects on Bithumb and Upbit surfaced. Citing anonymous sources, Wu Blockchain said projects claimed to have paid intermediaries millions to get listed on the exchanges.

Upbit responded, demanding the media outlet to disclose the list of digital asset projects that paid brokerage fees.