South Korea, once a preferred place for crypto businesses due to its legislator freedom, is now turning 180 degrees by allegedly banning at least 11 crypto exchanges from operating in the country. The reason – allegations of illicit activities and fraudulent behavior.
The Korean Financial Services Commission (FSC) is planning to shut down a dozen local cryptocurrency exchanges amid fraud allegations, as they have used fraudulent collective accounts.
However, no official information is issued by the FSC, but industry experts are certain that the exchanges would not receive the much-needed approval for operation by the Korean state.
The crackdown comes after many exchanges in South Korea failed to open real-name accounts for their customers, which is a prerequisite for business operations. Only large-scale crypto exchanges like Upbit, Bithumb, Coinone, and Korbit managed to secure real-name accounts for their clients.
Meanwhile, one by one crypto exchanges in Korea are already stopping operations. Crypto exchange Darlbit, for example, pulled the plug on its business on July 15 after notifying customers earlier last month that it would stop deposit and withdrawal services. CPDAX followed Darlbit by announcing its stopping operations on September 1.
“It is not a temporary but a permanent measure to close business. Those who possess cryptocurrencies in the account must withdraw them before 3:00 p.m. on August 31,” the exchange announced.
Meanwhile, several exchanges like Bitsonic, are in an overhaul mode, as Korean crypto exchanges have the obligation to also receive the Information Security Management System (ISMS) certification, which is yet another prerequisite for exchanges to operate in Korea.
“Once we are done with the renewal, we expect to achieve Information Security Management System,” Bitsonic noted, but experts doubt the halt of operations is temporary.
Korean crypto exchanges must finalize the approval process by September 24. However, People Power Party Congresswoman Cho Myeong-hee plans to extend the reporting period of local exchanges open for business until December 24.