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South Korea to block non-compliant crypto exchanges
South Korean authorities are reportedly looking into blocking crypto exchange platforms that may have operated without adhering to the requirements set by the country’s financial regulator.
On March 21, local media Hankyung reported that the Financial Intelligence Unit (FIU) of the Financial Services Commission is considering sanctions against crypto exchanges for allegedly operating in the country without reporting as an operator to the appropriate regulators.
South Korean financial authorities require crypto exchanges to report to regulators as virtual asset service providers (VASPs) under the country’s Specified Financial Information Act.
The FIU is investigating a list of exchanges and is conducting consultations with related agencies. The regulator is also considering sanctions, such as blocking access to the exchanges, as they begin to prepare countermeasures.
The regulator will reportedly crackdown on exchanges allegedly providing services to South Koreans without the appropriate VASP reports. The exchanges in the FIU’s list reportedly provided marketing and customer support to Korean investors without going through the country’s compliance process. Local media Hankyung mentioned that the crypto exchange KuCoin was on the list along with other crypto platforms. In a statement, a KuCoin representative told Cointelegraph: “We are closely monitoring regulatory developments across all jurisdictions, including Korea. At KuCoin, we believe that compliance is essential for the healthy and sustainable growth of the crypto industry—this has always been our stance and will continue to guide us as we move forward. We remain committed to supporting the industry’s long-term development through proactive and responsible practices.” Under the country’s laws, operators of crypto sales, storage, brokerage and management are required to report to the FIU. If exchanges don’t comply, their business will be considered illegal and subject to criminal penalties and administrative sanctions. An FIU official said in the report that measures to block access to the exchanges included in the list are being reviewed. The official said the financial regulator is currently consulting with the Korea Communications Standards Commission, the regulator in charge of the internet, on how they can block access to the exchanges. Related: Wemix denies cover-up amid delayed $6.2M bridge hack announcement Apart from foreign exchanges, South Korean crypto exchanges are also facing scrutiny over suspicions and rumors of financial misconduct. On March 20, prosecutors raided Bithumb following suspicions that its former CEO, Kim Dae-sik, embezzled company funds to purchase an apartment. The authorities suspect that the exchange and its executive may have violated some financial laws during the apartment purchase. However, Bithumb responded that Kim had already taken a loan to repay the funds. In addition, rumors of intermediaries getting paid to list projects on Bithumb and Upbit surfaced. Citing anonymous sources, Wu Blockchain said projects claimed to have paid intermediaries millions to get listed on the exchanges. Upbit responded, demanding the media outlet to disclose the list of digital asset projects that paid brokerage fees. Magazine: Crypto fans are obsessed with longevity and biohacking: Here’s why Stablecoin issuer Tether is reportedly in talks with a Big Four accounting firm to audit its assets reserves and verify that its USDT (USDT) stablecoin is backed at a 1:1 ratio. Tether CEO Paolo Ardoino reportedly said the audit process would be more straightforward under pro-crypto US President Donald Trump. It comes after rising industry concerns over a potential FTX-style liquidity crisis for Tether due to its lack of third-party audits. “If the President of the United States says this is top priority for the US, Big Four auditing firms will have to listen, so we are very happy with that,” Ardoino told Reuters on March 21. “It’s our top priority,” said Ardoino. It was reported that Tether is currently subject to quarterly reports but not a full independent annual audit, which is much more extensive and provides more assurance to investors and regulators. However, Ardoino did not specify which of the Big Four firms — PricewaterhouseCoopers (PwC), Ernst & Young (EY), Deloitte, or KPMG — he plans to engage. Tether recorded a profit of $13.7 billion in 2024. Source: Paolo Ardoino Tether’s USDT maintains its stable value by claiming to be pegged to the US dollar at a 1:1 ratio. This means each USDT token is backed by reserves equivalent to its circulating supply. These reserves include traditional currency, cash equivalents and other assets. Earlier this month, Tether hired Simon McWilliams as chief financial officer in preparation for a full financial audit. In September 2024, Cyber Capital founder Justin Bons was among those in the industry who voiced concerns about Tether’s lack of transparency. “[Tether is] one of the biggest existential threats to crypto. As we have to trust they hold $118B in collateral without proof! Even after the CFTC fined Tether for lying about their reserves in 2021,” Bons said. Related: Tether freezes $27M USDT on sanctioned Russian exchange Garantex Around the same time, Consumers’ Research, a consumer protection group, published a report criticizing Tether for its lack of transparency surrounding its US dollar reserves. Just three years prior, in 2021, the United States Commodities and Futures Trading Commission (CFTC) fined Tether a $41 million civil monetary penalty for lying about USDT being fully backed by reserves. Meanwhile, more recently, Tether has voiced disappointment over new European regulations that have forced exchanges like Crypto.com to delist USDT and nine other tokens to comply with MiCA. “It is disappointing to see the rushed actions brought on by statements which do little to clarify the basis for such moves,” a spokesperson for Tether told Cointelegraph. Cointelegraph reached out to Tether but did not receive a response by time of publication. Magazine: Dummies guide to native rollups: L2s as secure as Ethereum itself John Reed Stark, the former director of the Office of Internet Enforcement at the United States Securities and Exchange Commission (SEC), pushed back against the idea of regulatory reform at the first SEC crypto roundtable. The former regulator said the Securities Act of 1933 and 1934 should not be changed to accommodate digital assets and urged that digital assets do not escape the definition of securities under the current laws. The first-ever SEC crypto roundtable. Source: SEC “The people buying crypto are not collectors. We all know that they are investors, and the mission of the SEC is to protect investors,” Stark said. The former official added: “The volume of case law has developed so quickly because of all these crypto firms. They went for this sort of delay, delay, delay, idea, and they hired the best law firms in the world, and these law firms all fought the SEC with incredible briefs.” “I have read every single one of them. And they lost just about, I would argue, every single time,” he continued. Stark concluded that he saw no innovation in digital assets or cryptocurrencies compared to previous online revolutions, such as the debut of the iPhone. John Reed Stark, pictured on the far right, arguing against comprehensive regulatory reform. Source: SEC Related: SEC’s deadline extension is a ‘fork’ in case against Coinbase — John Reed Stark Stark has been one of the most vocal opponents of cryptocurrencies and the digital asset industry, often criticizing the industry for a lack of transparency and accountability. In February 2024, the former SEC official characterized a sponsorship deal between the Dallas Mavericks — a National Basketball Association (NBA) team — and crypto firm Voyager as an agreement with a “heroin manufacturing firm.” Stark later said that the government agency’s regulation by enforcement under former chairman Gary Gensler was warranted and added that cryptocurrency must conform to existing laws rather than the law evolving to embrace the future of money. Stark’s anti-crypto stance has been criticized by industry executives and investors as unhinged. In June 2023, notable investor Mark Cuban called out Reed’s views as “crypto derangement syndrome.” Magazine: SEC’s U-turn on crypto leaves key questions unanswered Bitcoin bulls who still think the cycle peak has yet to come as retail investors haven’t piled in yet might be using an outdated playbook, according to a crypto executive. “The idea that the cycle isn’t over just because onchain retail activity is absent needs reconsideration,” CryptoQuant founder and CEO Ki Young Ju said in a March 19 X post. Ju said that those tracking retail movements using only onchain metrics will not have seen the full picture. “Retail is likely entering through ETFs — the paper Bitcoin layer — which doesn’t show up onchain,” Ju said. “This keeps the realized cap lower than if the funds were flowing directly to exchange deposit wallets,” he added, noting that 80% of spot Bitcoin (BTC) exchange-traded fund (ETF) flows come from retail investors — a trend that Binance analysts already once observed in October last year. Since the launch of spot Bitcoin ETFs in January 2024, inflows have totaled around $35.88 billion. Source: Farside At the time, the analysts said most of the ETF buying likely came from retail investors moving their holdings from wallets and exchanges into funds with more regulatory protection. Ju was responding to counter-arguments over his earlier prediction on X that the “Bitcoin bull cycle is over” on March 17. “I’ve been calling for a bull market over the past two years, even when indicators were borderline. Sorry to change my view, but it now looks pretty clear that we’re entering a bear market,” he said. Ju explained that certain indicators are showing a lack of new liquidity, which is likely being driven by macro factors. He also clarified when he said the bull cycle was over, he meant Bitcoin could take “6-12 months” to break its all-time high, not that it’s about to crash. Related: Bitcoin is just seeing a ‘normal correction,’ cycle peak is yet to come: Analysts Traders often look at retail investor activity to spot signs of exhaustion or as a signal to start selling when the market appears overheated. There are several sentiment indicators which help market participants understand the level of retail interest in the market. One of these is the Crypto Fear & Greed Index, which measures overall crypto market sentiment, reading a “Fear” score of 31, down 18 points from its “Neutral” score of 49 yesterday. Other common signals used to track the level of retail interest in the crypto market include Google search trends for “crypto” and related keywords and the popularity of crypto applications in major app stores worldwide. While the Google search score for “crypto” worldwide was at a score of 100 during the week of Jan. 19 – 25, when Bitcoin reached its all-time high of $109,000 and US President Donald Trump’s inauguration, it has since declined by almost 62%. The amount of searches on Google for “crypto” has declined almost 62% since the end of January. Source: Google Trends At the time of publication, the Google search score for “crypto” stands at 38, with Bitcoin trading 22% below its January all-time high. Magazine: Memecoins are ded — But Solana ‘100x better’ despite revenue plunge This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. Arthur Hayes, Murad’s Prediction For Meme Coins, AI & DeFi Coins For 2025 Expert Sees Bitcoin Dipping To $50K While Bullish Signs Persist Aptos Leverages Chainlink To Enhance Scalability and Data Access Bitcoin Could Rally to $80,000 on the Eve of US Elections Sonic Now ‘Golden Standard’ of Layer-2s After Scaling Transactions to 16,000+ per Second, Says Andre Cronje Institutional Investors Go All In on Crypto as 57% Plan to Boost Allocations as Bull Run Heats Up, Sygnum Survey Reveals Crypto’s Big Trump Gamble Is Risky Ripple-SEC Case Ends, But These 3 Rivals Could Jump 500xSouth Korean regulators eye crypto exchanges
South Korean exchanges face scrutiny
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Tether to produce first full audit after scrutiny
Industry concerns over Tether’s lack of audits
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John Reed Stark: one of crypto’s staunchest critics
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