The Financial Services Commission (FSC) of South Korea has accused a number of local cryptocurrency exchanges of engaging in illicit activity. The Korea Herald reports, citing sources familiar with the matter.<\/p>\n
The regulator will halt operations of 11 firms and report their violations to the prosecutor’s office and the police.<\/p>\n
The exchanges are small- to mid-sized. They failed to meet FSC requirements on customer identification using named bank accounts and used \u201cfraudulent collective accounts\u201d.<\/p>\n
It is not known which platforms were targeted. According to a source cited by the publication, these companies will have to shut down their business, as the FSC will not issue them a license to operate in the future.<\/p>\n
On 30 January 2018, the South Korean authorities banned anonymous cryptocurrency trading within the country. Each trader must identify themselves using a bank account. Moreover, the account holder’s name on the exchange must match the name on the bank account.<\/p>\n
Under the amendments to the Law<\/a> on the provision and use of information about certain financial transactions, local bitcoin exchanges were required to register with the FSC by 24 September 2021. This includes ensuring compliance with know-your-customer (KYC) procedures in conjunction with partner banks.<\/p>\n In April 2021, FSC chairman Eun Sung-soo warned<\/a> about the risk of all local crypto exchanges being shut down. Only the country\u2019s largest platforms\u2014Bithumb, Upbit, Korbit and Coinone\u2014complied with the regulator\u2019s requirements.<\/p>\n Mid-sized and small players use corporate bank accounts to receive user funds. Some companies have already announced they are closing their business.<\/p>\n In July, Darlbit announced<\/a> the closure of its trading platform and ceased serving customers. The message said the reasons were regulator pressure and a cyberattack in which an undisclosed amount of funds was stolen.<\/p>\n The CPDAX platform also announced<\/a> that it would cease operations on September 1. Users must withdraw assets by August 31.<\/p>\n