- KoFIU notified investigative agencies about 16 unregistered cryptocurrency exchanges.
- According to the Special Financial Information Act, unregistered businesses may be punished by imprisonment for five years or ordered to pay a 50 million won fine.
- KoFIU warns users to be cautious and check whether the VASPs that they are dealing with are legitimately registered with the authority.
On August 18, KoFIU Korea Financial Intelligence Unit (KoFIU) notified investigative agencies about 16 unregistered cryptocurrency exchanges for violating the Specified Financial Act.
[Press Release] The Korea Financial Intelligence Unit (KoFIU) announced on August 18 that it has notified illegal business activities of 16 unregistered Virtual Asset Service Providers (VASPs) to the investigative authority. https://t.co/D5QAFYd4od
— Financial Services Commission – FSC Korea (@FSC_Korea) August 18, 2022
According to Korea’s Financial Service Commission, the 16 illegal cryptocurrency exchanges engaged in business activities that targeted domestic consumers by offering Korean-language websites through promotional events and providing payment option that supports the purchase of virtual assets using credit cards.
The 16 Virtual Asset Service Providers (VASP) that violated the Act and continued their operations in Korea include KuCoin, MEXC, Phemex, XT.com, Bitrue, ZB.com, Bitglobal, CoinW, CoinEX, AAX, ZoomEX, Poloniex, BTCEX, BTCC, DigiFinex, and Pionex.
In July last year, KoFIU warned foreign-based cryptocurrency exchanges to register their business with the authority, but the 16 VASPs continued their business activities in Korea.
According to the Special Act, unregistered businesses may be punished by imprisonment for not more than five years or by paying a fine not exceeding 50 million won. In addition, the violators cannot be reported as virtual asset business operators for a certain period of time in Korea.
According to News1, a Korean local news portal, an FIU official said:
Unreported virtual asset operators may be exposed to risks such as leakage of personal information and hacking because the information security management system (ISMS), which is a reporting requirement under the Special Act, is not properly equipped, and there is a risk of being misused as a money laundering route.
KoFIU further warns virtual asset users to be cautious and check whether the VASPs that they are dealing with are legitimately registered with the authority. Unregistered VASPs lack certification for ISMS, leaving users vulnerable to risks of personal information breaches and hacking.
KoFIU will continue to monitor illegal business activities carried out by unregistered entities and maintain close cooperation with relevant authorities to take the necessary actions.