South Korea has blocked access to 14 mobile apps of major crypto exchanges, targeting firms that failed to report their business activities in accordance with the country’s regulations. The move aims to curb money laundering risks and protect users.
South Korea Cracks Down on Unreported Crypto Exchanges
In a move to curb money laundering risks and protect users, ‘South Korean regulators have blocked the domestic access of 14 mobile apps belonging to overseas unreported virtual asset operators.’ The Financial Intelligence Unit (FIU) has been targeting these firms for failing to report their business activities in accordance with the Act on Reporting and Use of Specific Financial Transaction Information.
South Korea has implemented strict regulations on cryptocurrency trading and use.
In 2018, the government banned anonymous trading accounts, requiring users to verify their identities through a real-name system.
The Financial Services Commission (FSC) also imposed stricter know-your-customer (KYC) requirements for exchanges.
Additionally, South Korea introduced a 20% tax on cryptocurrency gains in 2020.
The regulations aim to prevent 'money laundering and maintain financial stability.'
Regulatory Pressure Mounts
Foreign virtual asset business operators that wish to operate in South Korea must comply with the reporting requirements set by the FIU. Failure to do so can result in severe penalties, including criminal punishment. The regulator has already blocked access to 17 apps last month and plans to block some exchanges’ sites as well.
Blocking of KuCoin and MEXC Apps
Two prominent crypto exchanges, KuCoin and MEXC, have had their domestic app access blocked since April 11. ‘CoinDesk reached out to the companies for a comment, but no response was received.’ The FIU has stated that it will continue to block domestic access through mobile applications and Internet sites of overseas unreported virtual asset operators in order to prevent money laundering risks and user damage.
KuCoin is a popular cryptocurrency exchange founded in 2017, headquartered in Seychelles.
It offers over 600 trading pairs, including Bitcoin, Ethereum, and other altcoins.
MXC Exchange, on the other hand, is a Singapore-based crypto platform established in 2018.
MXC provides a wide range of digital assets, with over 100,000 trading pairs available.
Both exchanges cater to global users, supporting multiple languages and currencies.
Future Enforcement Plans
The FIU plans to maintain its efforts to combat unreported crypto exchanges, working closely with relevant organizations to ensure compliance. The regulator’s goal is to protect users and prevent money laundering risks by targeting these firms. As the regulatory landscape continues to evolve, it remains to be seen how other countries will respond to South Korea‘s actions.
Background on Unreported Crypto Exchanges
In 2022 and 2023, the FIU targeted 16 and 6 companies, respectively, for failing to report their business activities. The regulator has also been cracking down on exchanges that operate illegally in South Korea.
