South Korean government officials believe that foreign exchanges that operate in Korea can be used for money laundering and also that user information on these platforms is not safe. Therefore, these exchanges are subject to being blocked in South Korea.
According to Blockchain Homeland and quoted by cryptoslate, South Korea’s Financial Services Commission (FSC) has referred 16 foreign cryptocurrency exchanges to investigative agencies for violating the Specific Financial Information Act. These exchanges had refused to report their performance to Korean regulators and will therefore be blocked.
The Special Financial Information Act prevents unlicensed cryptocurrency exchanges from operating; However, these 16 companies did not comply with the law and some offer cryptocurrency services to Koreans and hold events aimed at Korean users.
These 16 exchanges are:
Kocoin, Coinx MEXC, CoinW, ZB.com, Bitglobal, Bitrue, Poloniex, BTCEX, Phemex, XT.com, Pionex, BTCC, DigiFinex, AAX and ZoomEX.
South Korea’s Financial Services Commission blocks KuCoin and Poloniex
South Korea’s Financial Services Commission has asked the Broadcasting and Communications Commission and the Korea Communications Commission to block domestic access to the websites of these exchanges. In addition, regulators want to prohibit credit card companies from offering their services to these companies.
FSC officials described these exchanges as unfit for lack of Information Security Management System (ISMS) certification. This means that their users are at risk of having their personal information leaked. Apart from that, authorities believe that malicious agents can also use exchanges for money laundering.
Under the law, a person who operates an unregistered and illegal exchange can be jailed for up to 5 years or fined 50 million won ($37,900). This operator also cannot register as a domestic virtual asset operator for five years. This law applies to foreign and domestic exchanges operating in Korea.
In 2021 (1400), Korean authorities required crypto companies to obtain ISMS certification, which led to the departure of several crypto exchanges from the country.
However, 35 virtual asset providers can register locally; Five of these exchanges; UpBit, Coinone Gopax, Korbit and Bithumb are responsible for more than 99% of cryptocurrency transactions in Korea. It is worth noting that the fall of Terra has led to an increase in the sensitivity of South Korean authorities on digital currency regulations in this country.