South Korea to Investigate KuCoin Alongside 15 Crypto Exchanges for Unreported Operations

The South Korean Financial Services Commission (FSC) has put some cryptocurrency exchanges up for investigation under the claim that the concerned exchange companies are operating unlawfully in the country.

Some Crypto Exchanges Violated FSC Rules

On Thursday, the South Korean Federal Intelligence Unit (FIU) under the FSC reportedly notified investigative authorities that some cryptocurrency exchanges in the country are violating a section of the Specified Financial Information Act.

The Act, which was amended in March 2020 requires all digital asset providers, including crypto exchange companies, to report their activities to the government so that they will be recognized as legal operators in the country. Under the Act, digital assets providing companies who fail to report themselves cannot function and would be punished if they do so.

According to local reports, the FIU noted that about 16 cryptocurrency exchanges have been operating in South Korea without reporting themselves to the appropriate authorities, hence violating the above act. The exchanges mentioned are KuCoin, Bitglobal, CoinEX, DigiFinex, MEXC, Phemex, XT.com, Bitrue, ZB.com, CoinW, AAX, Poloniex, BTCEX, BTCC, ZoomEX, and Pionex.

The agency stated that all 16 exchanges have, in one way or the other, been unlawfully engaging in sales and marketing activities to promote their business. These activities include organizing some events, providing Korean language services on their website as well as making it possible for their customers to buy crypto assets with credit cards.

FIU Issued Warnings

The 16 crypto exchanges reportedly failed to register their activities even after the FIU reminded them of the need to do so in July 2021.

As such, if found guilty after being investigated, they may be required to pay a 50 million won (about $38K) fine and may also be completely banned from operating in the county for about five years.

However, before the commencement of the investigation, the FIU is reportedly planning to instruct credit card companies to suspend transactions with the concerned exchanges so that services involving crypto asset purchases using a credit card will no longer be available to the exchanges’ users.

The unit has also requested the appropriate South Korean communications commission to block domestic access to the exchanges.

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