04-02-2025 
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South Korea is cracking the whip on digital asset exchanges operating in breach of the country’s financial regulations and is targeting bans on KuCoin, BitMEX, and others, a new report says.
According to a report by the local business paper The Korea Economic Daily, the Financial Intelligence Unit (FIU) is weighing sanctions and other access restrictions on exchanges that have yet to register as financial operators with the required authorities.
The FIU, which falls under the Financial Services Commission (FSC), has begun investigating some notable offshore exchanges for this breach, including BitMEX, KuCoin, KCEX, CoinW, and Bitunix. It alleges that they have been operating Korean-language websites without reporting to authorities.
South Korea’s Special Financial Transactions Act requires all virtual asset service providers (VASPs) to report to the FIU and receive its approval. Violations can attract hefty penalties, sanctions, and even criminal punishment.
“We are currently reviewing blocking access to unreported overseas exchanges that are providing services to domestic investors through consultation with the Korea Communications Standards Commission,” stated an FIU official. The commission regulates the Internet space and can enforce blocks on websites and other online resources.
The FIU is also reportedly engaging with investors to assess any damage related to these exchanges.Exchanges mentioned in the report were quick to deny any wrongdoing. BitMEX told media outlets that it does not operate any Korean-language websites. KuCoin claimed it was “closely monitoring regulatory developments” in Korea and would engage with the FIU and other regulators to resolve the situation.
KuCoin and BitMEX are no strangers to regulatory run-ins. Two months ago, KuCoin pled guilty to operating an unlicensed money-transmitting business in the United States and settled with the Department of Justice (DOJ) for nearly $300 million. The DOJ found that the exchange deliberately avoided implementing anti-money laundering (AML) policies and facilitated billions of dollars in suspicious transactions. Just days prior, BitMEX was fined $100 million for violating U.S. AML laws; it was the second time the exchange paid a $100 million fine.
Back in South Korea, authorities have upped the ante on VASP compliance in the past year. Last month, the FSC imposed a partial three-month ban on Upbit, the largest Korean exchange, for failure to fully comply with AML laws. A week ago, Seoul police raided Bithumb offices to probe embezzlement claims by former CEO Kim Dae-sik. Bithumb is the second-largest exchange.
According to the latest data, more than 9.6 million South Koreans hold an account with the country’s top five licensed ‘crypto’ exchanges.
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