South Korea Targets Unregistered Crypto Exchanges with Possible Sanctions

South Korea’s financial watchdog is cracking down on illegal crypto activity, with several major exchanges in the crosshairs. According to Hankyung, the Financial Intelligence Unit (FIU) has identified BitMEX, KuCoin, CoinW, Bitunix, and KCEX as unregistered Virtual Asset Service Providers (VASPs) operating Korean-language platforms without proper authorization.

Under South Korean law, any crypto exchange serving local investors must register with the FIU. Those that fail to comply are considered illegal operations. The FIU is now reviewing potential sanctions against these platforms, including access blocks, in consultation with the Korea Communications Standards Commission.

An FIU official stated that authorities are “organizing damage cases and related data” to improve coordination and prepare for enforcement action. The goal is to implement concrete measures within the year to protect domestic investors from unregulated platforms.

Despite repeated outreach, BitMEX, KuCoin, and CoinW have not responded to inquiries regarding their compliance status.

The move highlights South Korea’s increasing efforts to tighten oversight of the crypto market amid growing concerns over investor protection and money laundering risks. Just last month, Upbit, one of Korea’s largest compliant crypto exchanges, faced a temporary suspension from onboarding new users due to regulatory non-compliance.

As regulatory scrutiny intensifies, crypto exchanges operating in or targeting the Korean market may face severe penalties unless they register and adhere to local laws. This development signals the government’s firm stance on enforcing transparency and accountability in the digital asset space.