The Korea Financial Intelligence Unit (KoFIU) informed investigative authorities of illegal business activities conducted by 16 unregistered Virtual Asset Service Providers (VASP). These crypto platforms operate in the country of South Korea without permission.
In a notice published on August 18, KOFIU listed some known crypto platforms that violate the Specified Financial Transactions Information Act in South Korea.
The platforms mentioned include KuCoin, MEXC, Phemex, XT.com, Bitrue, ZB.com, Bitglobal, CoinW, CoinEX, AAX, ZoomEX, Poloniex, BTCEX, BTCC, DigiFinex and Pionex.
Unregistered crypto platforms expect tough measures
The inspection found that “(…) the 16 overseas VASPs engaged in business activities directed at domestic consumers”. KOFIU justified this by saying that the VASPs “(…) offer Korean-language websites, hold promotional events for South Korean consumers, and offer credit card payment options for digital assets“.
In addition, the agency advised users when dealing with unregistered Virtual Asset Service Providers (VASPs) “special caution” to let rule to avoid “damage”.
The circular follows an earlier notification dated 22 July 2021 requiring overseas-based VASPs to apply for registration to do business in the country. This was stated by KoFIU “The authorities intend to take the necessary measures” if that is not the case.
These actions may include notifications from Financial Intelligence Units (FIUs) in the home countries of the 16 unregistered VASPs. According to the authority, it can also be done in South Korea to a limitation of registration as a VASP for a certain period and. Moreover, is Up to five years in prison or a fine of 50 million KRW (approximately US$37,750) for illegal business activities.
Illegal VASPs are to be penalized by new rules
In addition to suspending the operations of crypto exchanges, Authorities make cryptocurrency transfers between registered and unregistered platforms “impossible”.
The announcement goes on to say, “KoFIU calls on the Communications Commission of Korea and the Communications Standards Commission of Korea to to block domestic access to websites by unregistered VASPs. With this is KoFIU “ban the use of virtual asset services offered by unregistered companies”.
In addition, according to the announcement, Credit card companies have been told to cut ties with the ‘illegal’ platformswhile the authorities continue to monitor activity in the industry.
Last week, Singapore-based Crypto.com acquired two South Korean crypto companies. This enables Crypto.com to act as a registered virtual asset provider under the country’s Electronic Financial Transactions Act.
In light of the crackdown, South Korean police are also experimenting with confiscating virtual assets in other civil crimes. Be[In]Crypto has previously cited reports suggesting that the country’s financial regulators may also reconsider current legislation. The FSC has already formed a task force to create a legal framework for cryptoassets.
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