South Korea’s 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 of 5 years imprisonment or up to KRW 50 million in fines can be imposed,” the regulator said.
16 Foreign Crypto Exchanges Reported by South Korean Regulator
South Korea’s main financial regulator, the Financial Services Commission (FSC), announced on Thursday that the country’s Financial Intelligence Unit (KoFIU) informed investigating authorities of the illegal business activities of 16 service providers. unregistered virtual assets (VASP).
The KoFIU is South Korea’s Financial Intelligence Unit (FIU) and the lead agency in the Asian country for anti-money laundering and counter-terrorist financing (AML/CFT) matters.
The 16 entities are Kucoin, MEXC, Phemex, XT.com, Bitrue, ZB.com, Bitglobal, Coinw, Coinex, AAX, Zoomex, Poloniex, BTCEX, BTCC, Digifinex, and Pionex.
All 16 crypto exchanges are based outside of Korea with no official domestic presence, the regulator said, adding that they were found to engage in crypto trading activities targeting domestic consumers. For example, they offer Korean-language websites, run promotional events targeting Korean consumers, and offer a payment option that supports the purchase of crypto assets using credit cards in the country.
The KoFIU notified foreign-based crypto exchanges on July 22 last year that they must register their business with the authority. However, the aforementioned 16 entities continued to operate in South Korea without obtaining registration.
The authority specifies:
For illegal business activities of unregistered entities, a maximum of 5 years imprisonment or up to KRW 50 million [$38,000] fines can be imposed with a restriction for registration as a VASP in the domestic market for a certain period of time.
The regulator explained that the financial authorities of the jurisdictions hosting the service providers will be informed and that the processing of the associated credit cards will be halted in the internal market. In addition, “virtual asset transfers to and from the 16 unregistered entities will be made impossible as authorities have issued an administrative directive requiring the suspension of transactions between registered and unregistered entities,” the KoFIU described.
Emphasizing that “authorities plan to take necessary measures” to prevent crypto service providers from operating without registration in South Korea, the regulator pointed out:
The KoFIU will continue to closely monitor illegal business activities carried out by unregistered entities and maintain close cooperation with relevant authorities.
What do you think of the South Korean regulator taking action against crypto exchanges operating illegally in the country? Let us know in the comments section below.
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