- South Korea is investigating foreign crypto exchanges for carrying on with operations without proper registration.
- Bithumb is facing a probe over allegations of embezzlement linked to its former CEO Kim Dae-sik.
- South Korea is planning stronger rules and tighter anti-money laundering measures.
South Korean regulators are considering actions against foreign cryptocurrency exchanges they say illegally operated in the country. Local media reported today that the Financial Intelligence Unit (FIU) of the Financial Services Commission is investigating some of the platforms that did not report under the Specified Financial Information Act as virtual asset service providers. The FIU is now consulting with related agencies to prepare sanctions and countermeasures.
The exchanges under review include BitMEX, KuCoin, CoinW, Bitunix, and KCEX, which allegedly offered services such as Korean-language websites and customer support to South Korean users without meeting local compliance standards. Currently, if a business facilitates cryptocurrency transactions such as trading, storage, brokering, or management, they are required to report to the FIU.
The financial authorities are also reportedly attempting to have access blocked to these exchanges. An FIU official noted that talks are underway with the Korea Communications Standards Commission, which regulates the internet, to figure out how to implement potential blocks.
Regulators Tighten Compliance Amid Investigations
In addition to foreign exchanges, South Korean regulators are also looking into the domestic market. The prosecutors raided the offices of Bithumb, one of the country’s major crypto exchanges, on March 20 on suspicions of embezzlement by the ex–CEO of Bithumb, Kim Dae-sik.
The authorities believe funds from the company were used to buy an apartment for the CEO and are looking into whether financial laws were broken in the purchase. Bithumb stated that Kim has already taken a loan to repay the disputed funds.
Additionally, allegations have surfaced that intermediaries may have received large sums to help projects secure listings on platforms such as Bithumb and Upbit. In response to the allegations, Upbit has requested media outlets to release the names of digital asset projects involved in such deals.
This is not the first time that the FIU is enforcing crypto exchanges. In 2022, the FIU asked the Korea Communications Standards Commission to shut down 16 such unregistered foreign exchanges, which include KuCoin, MEXC, and Poloniex, forcing some platforms to leave South Korea.
New regulations planned to tighten crypto market oversight
South Korea is continuing to enforce strict rules for both domestic and foreign crypto exchanges. The FIU revealed that the number of registered crypto firms in South Korea dropped from 42 in 2024 to 31 this year. Several other firms, like GDAC, ProBit, Huobi Korea, and Bitrade, also failed to renew their registrations and were removed from the official registry.
Meanwhile, South Korean authorities are reportedly preparing new, tighter anti-money laundering rules to avoid illegal activity in the crypto markets. Separately, the Bank of Korea is planning to launch its own CBDC pilot program in April that will last for three months.