South Korea has been making quite some noise in the crypto-verse. Following the dramatic downfall of Terra, the regulators in the country have had eyes on all crypto platforms. From formulating a regulatory framework to taking down unregistered platforms, the country seemed to invest significant time in making the industry safe. In a similar move, the Financial Services Commission [FSC] of South Korea went on to accuse about 16 crypto exchanges of providing services without permission.
This did not come as a surprise as the Korean government has been quite stringent about its stance on the crypto market. The Financial Intelligence Unit [FIU] reportedly revealed that 16 foreign crypto platforms had violated the Specific Financial Information Act.
The list entailed several popular ones as well. Justin Sun’s Poloniex, Kucoin, MEXC, Phemex, Bitrue, Bitglobal, Coinex, BTCEX, BTCC, DigiFinex, Pionex, ZB.com, ZoomEX, XT.com, CoinW as well as AAX. It should be noted that Kucoin garnered backlash from Canadian regulators for not complying with securities law.
Speaking about the same, 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.”
So what is South Korea’s Specific Financial Information Act?
Under this act, businesses operating in the region must garner information security management system (ISMS) certification and report it to the FIU. If they fail, they could be looking at five years imprisonment with a 50 million won fine.
Furthermore, according to the FIU, the companies mentioned above were organizing events and offering services in Korean on their websites. Additionally, it was brought to light that the businesses were aggressively promoting themselves by providing benefits for credit card purchases of virtual assets. Therefore, credit card companies are likely to be investigated as well.
It should be noted that Crypto.com made its debut in the South Korean market earlier this week. The community was glad exchanges like Binance and FTX weren’t on the list.
Several speculate that this could also start South Korea’s big crypto take down.