South Korea’s financial regulator to halt operations of 11 Bitcoin (BTC) exchanges
South Korea’s Financial Services Commission (FSC) has accused a number of local cryptocurrency exchanges of engaging in illegal activities. This was reported by The Korea Herald, citing knowledgeable sources.
Who is in the FSC’s crosshairs?
The regulator in South Korea will stop the operations of eleven companies and report their offences to prosecutors and police.
These are small to medium-sized cryptocurrency exchanges, which have failed to meet the FSC’s customer identification requirements with named bank accounts and have used “fraudulent collective accounts”.
It is unclear which platforms have been targeted by the regulator. According to the publication’s insider, these companies will have to shut down business as the FSC will not issue them a permit to operate in the future.
On 30th January 2018, South Korean authorities banned anonymous cryptocurrency trading in the country. Every trader is required to identify themselves with their bank account. In doing so, the name of the account holder on the exchange must match the name of the account holder.
South Korea’s additional conditions for crypto market
Under the amendments to the Act on the Provision and Use of Information on Certain Financial Transactions, local Bitcoin exchanges are required to register with the FSC by 24th September 2021. This requires them, among other things, to ensure that they comply with KYC procedures with their partner banks.
In April 2021, FSC chairman Eun Sung-soo warned of the risk of closing down all local cryptocurrency exchanges. Only the country’s largest platforms — Bithumb, Upbit, Korbit and Coinone — have complied with the agency’s demands.
Small and medium market participants use corporate bank accounts to accept user funds. Some businesses have already announced that they are closing down.
In July 2021, Darlbit announced it was to shut down its trading platform and stop serving customers. It said the reason was regulatory pressure and a cyber attack that stole an undisclosed amount of funds.
The CPDAX platform also said it would cease operations on 1st September. Users have to withdraw their assets until 31st August.
Earlier in June, South Korean media reported that local cryptocurrency exchanges were considering filing a lawsuit against the country’s government. Industry participants believe that regulators are shirking their duties by shifting responsibility to banks.
Many Bitcoin exchanges in South Korea are now being shut down as they are accused of illegal activities. Market participants are enraged that the regulator is shifting responsibility to banks and facilitating the closure of crypto trading in the country. Let’s see how the market reacts.
Belgium native who has a passion for writing. Since 2015 I have understood that the blockchain will radically change our lives, and I absolutely want to share my findings with you!