- South Korea’s FIU asked KCSC to block 27 crypto platforms for failing to register as VASPs and for noncompliance with AML standards.
- The move affected even popular crypto exchanges like KuCoin and MEXC, banning South Koreans from accessing their apps and websites.
South Korea’s Financial Intelligence Unit (FIU), an agency under the Financial Services Commission (FSC), is clamping down on unregistered crypto exchanges. Recently, the country’s financial watchdog blocked 27 platforms from domestic access, including leading digital asset trading venues KuCoin and MEXC.
South Korea’s Enforcement Action on 27 Crypto Platforms
According to The Asia Business Daily, the FIU’s geoblock stems from the companies’ illegal operations as virtual asset service providers (VASPs). Following deliberations on October 6 and 7, the agency has classified them as “unreported VASPs” for failing to meet regulatory requirements, such as securing an Information Security Management System (ISMS) certification and filing a report with the FIU.
Pursuant to the “Act on Reporting and Using Specified Financial Transaction Information,” a VASP can operate in South Korea or provide services to Korean nationals only if it registers with the FIU. Failure to do so constitutes an illegal activity, and violators could face criminal prosecution.
The FIU warned that VASPs operating illegally are not subject to regulation or supervision under existing laws, particularly the Virtual Asset User Protection Act and the Specified Financial Information Act (VAUPA). As a result, they likely lack or have inadequate anti-money laundering (AML) safeguards.
Investors interacting with these entities could be exposed to hacking, phishing, scams, or commingling of their assets with criminal proceeds. Additionally, their operations are highly likely to fail, subjecting users to financial losses from counterparty risk, exorbitant fees, or sudden platform closure.
Blocked Crypto Apps and Sites in South Korea
The following were sites affected by the FIU’s enforcement action as of October 13:
- Kucoin
- MEXC
- Phemex
- XT.com
- Bitrue
- CoinW
- ZoomEX
- Poloniex
- BTCC
- DigiFinex
- Pionex
- Blofin
- Apex Pro
- WEEX
- BitMart
- KCEX
- BingX
- P2B
- Nonkyc.io
- SUPEREX
- Coin Solution
- Sinbad Solution
- Xgram
- Tapbit
- Coinmy
- Bigone
- Ubit
The FIU initially blocked the entities’ mobile apps on Apple and Google with assistance from the Korea Communications Standards Commission (KCSC). After that, it has also blocked access to their websites within its jurisdiction.
An FIU official said that their team is closely coordinating with the Digital Asset eXchange Alliance (DAXA) to help users of the affected platforms safely withdraw their assets. Meanwhile, it advised people to check the list of registered VASPs on the FIU website first before using any crypto-related platform to avoid inconvenience and risks.