South Korea warns users after reporting 40 unregistered crypto firms

South Korea’s Financial Intelligence Unit referred about 40 unregistered virtual asset service providers to law enforcement and warned consumers about the risks of dealing with unauthorized crypto businesses. The FIU, part of the Financial Services Commission, made the announcement Tuesday.

Any company offering virtual asset services inside South Korea must register with the FIU and obtain Information Security Management System certification under the Special Financial Transactions Act. Foreign firms that serve South Korean residents face the same requirements, the regulator said.

The FIU said unregistered operators fall outside the coverage of the Virtual Asset User Protection Act and the Special Financial Transactions Act. Users of those platforms face a greater risk of data leaks and cyberattacks, and the services themselves can be used to hide criminal proceeds or launder money, the agency added.

Customers may not recover losses if an operator takes payment and fails to deliver virtual assets, according to the FIU. Some users have already faced excessive fees that were not disclosed in advance.

Investigators found cases where overseas crypto businesses targeted South Korean users while trying to hide their domestic operations. The FIU cited examples of firms running customer recruitment campaigns through Telegram and KakaoTalk open chat rooms, then conducting customer support in English to avoid regulatory attention.

Private currency exchange businesses sold stablecoins and other digital assets directly to international students, tourists, foreign workers in South Korea, and individuals who preferred not to identify themselves, regulators reported. Those exchanges converted virtual assets into Korean won.

The FIU also warned about promotional activity on social media. Some people received fees from overseas virtual asset service providers to advertise those businesses through YouTube channels, Telegram groups, and online chat rooms, authorities said.

Consumers who suspect illegal virtual asset activity can file reports with the FIU, the Digital Asset eXchange Alliance, or law enforcement. Individuals can also submit complaints directly to investigative authorities.

A financial authority official said agencies would continue coordinated enforcement actions against illegal virtual asset activity. Regulators plan to maintain monitoring through public tip-offs and expand joint investigations with related institutions, the official added.

The warning arrives as South Korea prepares to introduce a regulated framework for cross-border virtual asset transfers in December. Amendments to the Foreign Exchange Transactions Act will require companies that provide international digital asset transfer services to register with the Ministry of Economy and Finance and report transactions through the Bank of Korea’s foreign exchange monitoring system.

Overseas remittances processed through South Korea’s five largest won-denominated cryptocurrency exchanges rose from 34.02 trillion won in 2022 to 163.55 trillion won in 2025, SBS Biz reported this week. Toss Bank recently signed an agreement with the Solana Foundation to explore stablecoin-based remittance and settlement services.

Separately, the Financial Services Commission announced plans last week to expand its regulatory sandbox framework to cover digital asset-related legislation, including the Virtual Asset User Protection Act. Authorities are considering new pathways for blockchain and fintech services to operate under regulatory supervision.

The combination of enforcement action, new cross-border rules, and sandbox expansion signals that South Korea is tightening its grip on unregistered operators while building a formal channel for compliant firms to operate. The December deadline for Foreign Exchange Transactions Act compliance will create a concrete test of how many offshore operators exit the market or come into registration.