South Korea flags 16 foreign crypto exchanges for not complying with local laws

The Financial Services Commission (FSC), South Korea’s financial sector regulator, intends to prohibit domestic access to foreign crypto exchanges that are not recognized by the nation. 

By September 24, these trading platforms must have the appropriate licenses, as their websites will be immediately blocked if they don’t comply. Additionally, users who continue to do business with such unregulated exchanges risk penalties.

According to media reports, the financial industry watchdog’s intelligence unit requested that the local websites of 16 foreign cryptocurrency exchanges be blocked. Reports said that a similar warning had been given to the nation’s other law enforcement organizations.

16 crypto exchanges could face a serious probe

The FSC could reportedly launch investigations into the 16 foreign cryptocurrency exchanges that operate illegally in the country, KuCoin, MEXC, Phemex, ZB.com, Bitglobal, CoinW, Bitrue, AAX, XT.com, ZoomEX, CoinEX, BTCEX, BTCC, DigiFinex, Poloniex, and Pionex, and notify their registered countries of their infringement.

Notably, the Korean Information Security Management System certification (ISMS) is one of the prerequisites for foreign crypto platforms to operate in South Korea. The certification mandates strict data maintenance for anti-money laundering and KYC requirements.

To conduct business in the South Korean market, they must also adhere to the Specific Financial Information Act’s rules. The Law specifies that failure to operate with the proper permit may result in up to five years in prison or a fine of 50 million won ($43,500). 

During a crackdown in South Korea last year, roughly 60 cryptocurrency exchanges were forced to close because they didn’t adhere to these standards. According to reports, 35 of these businesses currently have permission to operate in South Korea. These include the leading five exchanges, which together account for more than 99% of the local market: Bithumb, Coinone, Upbit, Gopax, and Korbit.

Recently, while investigating Terraform Labs’ collapse, the Korean crypto exchanges decided to work together for an emergency system in such unfavorable conditions, as TheCoinRise reported.