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South Korea Cracks Down on 40 Unregistered Crypto Operators
South Korea's FIU referred 40 unregistered crypto operators to police, warning customers lack protection under local user laws. The crackdown follows a push for tighter FATF rules and a zero-threshold Travel Rule set for August.
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South Korea’s Financial Intelligence Unit referred 40 unregistered virtual asset service providers to police authorities, the FIU said. Only 28 firms have completed the required registration and ISMS certification under the Specified Financial Transaction Information Act. Every other provider serving South Korean customers is operating illegally.
The FIU detailed several evasion tactics uncovered during its review. Offshore platforms ran Korean-language marketing on Telegram and KakaoTalk to recruit local users, then routed customer support through English-only channels to obscure their business inside the country. Private money changers were found converting stablecoins into won for international students and foreign workers residing in South Korea, the FIU said. In other cases, YouTubers accepted fixed payments from overseas exchanges to promote unregistered platforms to Korean audiences.
Customers using those unregistered platforms fall outside the Virtual Asset User Protection Act and the Specified Financial Transaction Information Act. The FIU warned that users face exposure to data breaches, hacking, and exit scams with limited legal recourse for recovering losses.