South Korea Expands Crypto Exchange Crackdown

This is due to violations of the Specific Financial Transaction Information Reporting and Use Act. Under the law, all foreign virtual asset service providers (VASPs) are required to register before operating in South Korea.

South Korea’s Financial Intelligence Unit (FIU) has imposed new restrictions on 17 foreign crypto exchanges on Google Play. The move follows pressure from the FIU on Google to block access to the unregistered platforms for domestic users.

The action took effect on March 25, effectively preventing any new installations and updates of specific apps.

This is due to violations of the Specific Financial Transaction Information Reporting and Use Act. Under the law, all foreign virtual asset service providers (VASPs) are required to register before operating in South Korea. Buying and selling cryptocurrencies in an exchange that does not comply can result in fines and even criminal penalties.

The FIU confirmed that it also affected exchanges, such as KuCoin, MEXC, Bitunix, and others targeted at South Korean users. However, these platforms could not fulfill their fundamental criteria, such as service support in the Korean won or Korean language. Therefore, regulators decided those companies were acting illegally on the domestic market.

South Korea Expands Crypto Exchange Crackdown

S. Korea’s favorite exchange, KuCoin, was caught on the FIU’s restricted list. Consequently, the price of a token native of it KuCoin Token (KCS) fell down by 0.3% within 24 hours. As a result of investor uncertainty in reaction to access blocked on the platform, the price movement is still.

The FIU said KuCoin has continually encouraged South Korean residents to use its services without meeting registration requirements. Because of non-compliance, the exchange will be inaccessible through Google Play for new users. It will also prevent current users from getting updates to the app, thereby reducing its functionality.

As a result, authorities are working with cybersecurity agencies to monitor unauthorized access and foil any financial transactions with unregistered exchanges. These measures include blocking related websites and freezing financial flows through local banks. The government has also encouraged users to remove funds from unregistered operating sites as soon as possible.

MEXC and Others Under Investigation for Unlicensed Operations

Currently, South Korean regulators are reviewing MEXC and several other platforms, including BitMEX, CoinW, and KCEX. It is alleged that these exchanges have targeted investors in the region without the proper licensing, and an official investigation from the FIU has taken place. It was found that these platforms did not build the required local presence.

The block of Google Play does not affect the existing downloads, but the wider crackdown will soon be extended to the other app stores and also platforms. Apple Korea and local internet providers are now working with the FIU to enforce a larger ban. They are also being investigated for their transactions with these platforms through financial institutions.

The idea is to limit the market access of unregistered providers and protect investors through this multi-agency approach. This is in line with a move to increase supervision of the crypto sector. Domestic crypto participation is on the rise, making enforcement of such restrictions timely and important.

The FIU released a list of the registered exchanges and asked users to immediately get rid of the non-compliant ones. But this follows the national strategy to form a transparent and lawful crypto market. This situation marks the rise of South Korea’s crypto adoption and the need for proper regulation.

On the other hand, prosecutors are investigating domestic exchange Bithumb for financial misconduct related to its former CEO, Kim Dae-sik. During the probe into misuse of company funds, authorities raided Bithumb’s headquarters. This case, while different, puts pressure on the wide crypto field to guarantee properness.