The Korean government has notified relevant agencies to investigate and block domestic access to the exchanges.
South Korean government said it had notified investigative agencies about 16 unregistered cryptocurrency exchanges that have been operating in the country without reporting their businesses to the government.
The 16 exchanges include KuCoin, MEXC, Bitrue, Phemex, XT.com, ZB.com, Bitglobal, CoinW, CoinEX, AAX, ZoomEX, Poloniex, BTCEX, BTCC, DigiFinex, and Pionex.
The FSC noted that the exchanges have been violating the Special Financial Information Act (Special Act). Local media outlet News Korea noted that under the Special Act, it is illegal for trading platforms to operate in the country without registering with relevant authorities.
Per the report, the Financial Intelligence Unit (FIU) reached out to the crypto exchanges in July 2021, notifying them that they are mandated to register and report their businesses to the government.
However, the 16 accused exchanges ignored the warning and continued providing services to Korean residents despite not being registered.
“Unreported virtual asset operators may be exposed to risks such as leakage of personal information and hacking because the information security management system (ISMS) under the Special Act is not properly equipped, and there is a risk of being misused as a money laundering route,” an FIU official said.
Virtual asset providers are required to meet specific requirements before offering services in South Korea. One important requirement is obtaining information security management system (ISMS) certification from the Financial Intelligence Unit (FIU).
This certification also requires the virtual asset exchange to report its business at intervals to the government.
Exchanges Could Be Punished
According to Korean rules, founders of virtual asset exchanges found guilty of violating the Special Act could be punished with up to five years imprisonment.
Additionally, the guilty exchanges could be fined no more than 50 million won ($37,854) for violating the rules. Furthermore, the trading platforms found guilty will not be able to register as domestic virtual asset business for the next five years.
Notably, the rules apply to domestic and foreign cryptocurrency exchanges rendering services to Koreans.
In a bid to prevent the exchanges from operating any further, the FIU requested other concerned agencies to block access to the trading platforms’ websites.
Source: https://thecryptobasic.com/2022/08/18/kucoin-bitrue-poloniex-and-13-cryptocurrency-exchanges-accused-by-financial-authorities-of-operating-illegally-in-south-korea/?utm_source=rss&utm_medium=rss&utm_campaign=kucoin-bitrue-poloniex-and-13-cryptocurrency-exchanges-accused-by-financial-authorities-of-operating-illegally-in-south-korea