The South Korean government has taken a decisive step in its ongoing crackdown on the crypto industry

This time, foreign exchanges are feeling the heat. KuCoin, BitMEX, and several other major platforms are now facing sanctions

South Korean authorities are planning to impose sanctions on foreign crypto exchanges that are operating in the country without proper registration, according to a Friday, March 24 report by Korea Economic Daily.

The Financial Intelligence Unit (FIU) has identified several crypto platforms that have been offering services to South Korean investors despite not meeting the legal requirements to do so. These exchanges allegedly provide Korean-language websites, customer support, and marketing campaigns catering to local investors without registering under South Korea’s Virtual Asset Service Provider (VASP) regulations.

KuCoin, BitMEX Among Exchanges Facing Sanctions

KuCoin and BitMEX are among the platforms that are now facing sanctions for allegedly operating illegally in South Korea. Other exchanges mentioned in the report include CoinW, Bitunix, and KCEX.

The FIU is working with the Korea Communications Standards Commission to block access to these platforms and impose penalties before the end of the year.

At the same time, the central bank is pushing forward with its digital initiative. The Bank of Korea is set to launch a three-month pilot program for its Central Bank Digital Currency (CBDC) in April.

The country’s stance on Bitcoin integration has also been subject to change.

Earlier this week, the South Korean government shot down a proposal to include Bitcoin in the country’s financial reserves. The Ministry of Economy and Finance reportedly suggested diversifying the country’s foreign currency reserves to include crypto assets due to concerns over the U.S. dollar's stability. However, the government rejected the suggestion, highlighting the risks associated with crypto’s volatility and security.

Prosecutors Raid Bithumb After Allegations of Embezzlement

Meanwhile, local crypto giants are also facing difficulties.

Recently, prosecutors raided Bithumb after allegations surfaced that its former CEO, Kim Dae-sik, had embezzled company funds to purchase an apartment. Bithumb, however, denied any wrongdoing, stating that Kim had taken a loan to repay the money in question.

At the same time, reports emerged that intermediaries received millions of won in exchange for listing certain crypto projects on major South Korean exchanges. Upbit, one of the country’s largest platforms, called for transparency, demanding a full list of projects involved in these alleged pay-to-list deals. The implications could be severe, potentially shaking investor confidence in the country’s already turbulent crypto market.