Korea's Financial Services Commission (FSC) reported 16 exchanges cryptocurrency abroad to investigative authorities for violations of the Separate Financial Information Act.
According to the report, the law prevents exchanges cryptocurrency unregistered to operate without a license, but these 16 unregistered companies already provide services cryptocurrency for Koreans and organizes events targeting Koreans
The exchanges in question include MEXC, KuCoin, CoinW, CoinEX, ZB.com, Bitglobal, Bitrue, Poloniex, BTCEX, Phemex, XT.com, Pionex, BTCC, DigiFinex, AAX and ZoomEX.
The report revealed that the breach was detected by the FSC's Institute for the Analysis of Financial Information.
Authorities informed the companies of their reporting obligations, but they did not comply.
The FSC wants to prevent the operation of these exchanges within its jurisdiction. It asked the Broadcast and Communications Commission and the Korea Communications Commission to block domestic access to their websites.
Meanwhile, the regulator wants to ban credit card companies from providing services to them.
Exchanges that do not have ISMS certificates
Officials describe the exchanges as ill-equipped because they do not have an Information Security Management System (ISMS) certificate, meaning their users are at risk of leaking personal information. core.
Additionally, the officials added that malicious actors could also use exchanges to launder money.
Under the Act, an individual operating an unregistered and illegal exchange can be jailed for up to five years or fined 50 million won ($37,900).
The law applies to both foreign and local exchanges.
South Korean Cryptocurrency Regulations
South Korea has one of the most comprehensive regulatory frameworks for the cryptocurrency industry.
In 2021, authorities required crypto companies to obtain ISMS certification, leading to some crypto exchanges having to leave the country.
Meanwhile, the recent collapse of the ecosystem Terra has led to increased focus on domestic cryptocurrency regulations.