South Korea looks into KuCoin and BitMEX in crypto exchange crackdown

South Korean officials are considering blocking crypto exchange platforms operating in the country without reporting to the right authorities that they were doing so. BitMEX and KuCoin have been mentioned.

Reports say the bans are aimed at foreign exchanges that are well-known to investors in the US. These include BitMEX, KuCoin, CoinW, Bitunix, and KCEX.

South Korea Financial Intelligence Unit launches enforcement action against unregistered foreign crypto exchanges in the country.

BitMEX, KuCoin, CoinW, Bitunix and KCEX are among those named. pic.twitter.com/SSpp9Ai5Jp

— BO$$ (@Crypto_Boss_001) March 21, 2025

It was found that these exchanges had Korean-language websites. That’s not an issue. The issue is that the exchanges have been operating Korean-language websites without reporting or providing marketing and customer support activities targeting Korean investors.

In South Korea, the Specified Financial Information Act says that crypto companies must report to the government as virtual asset service providers (VASPs). Because crypto companies are not following the rules, the government is also considering sanctions, like stopping access to the exchanges, as it starts to plan how to stop this. 

Actions will be implemented this year

The country’s rules require businesses to report to the FIU when buying, storing, trading, or managing crypto. If companies don’t follow the rules, their business will be considered illegal and could face criminal and administrative punishments. 

In the story, a FIU official said that steps are being discussed to block access to the exchanges on the list. A government worker said that the finance watchdog is currently talking with the Korea Communications Standards Commission, which is in charge of the internet, about how to stop people from getting to the exchanges. 

An FIU official said, “We are organizing damage cases and related data to strengthen communication between authorities, and we expect to see tangible measures taken within this year.”

Guaranteed that the Korean government would take action. This is why: In 2022, the FIU asked the Korea Communications Standards Commission to block access to 16 foreign exchanges that had not been reported. 

They also worked with Korean card companies to check and stop credit card services for buying virtual goods and making payments in Korea. Many foreign exchanges have left the Korean market and are no longer taking new members as a result.

According to the FIU, there are now only 31 registered crypto-dealing firms in South Korea, more than 26% less than the 42 firms that existed in 2024. Some of the companies that were taken off the stock market are GDAC, ProBit, Huobi Korea, and Bitrade. 

Does South Korea value user protection more than fostering innovation?

The government has to balance supporting innovators and keeping asset owners safe since more than 30% of South Koreans own crypto assets. 

The crypto industry comes with some risks. Therefore, officials are carefully examining how a volatile crypto market will affect things. They are also very strict with companies, including their own.

Upbit, South Korea’s biggest bitcoin exchange, was also given a suspension notice for a possible Know Your Customer breach. It looks like Upbit has also asked South Korea’s Financial Intelligence Unit to cancel the business fines.

This was before the Financial Services Commission said that universities and nonprofits would be able to accept cryptocurrency donations starting in the second half of 2025. 

Also, on March 20, police searched Bithumb because they thought that Kim Dae-sik, who used to be CEO of the company, had taken money to buy an apartment. When the exchange and its leader bought the apartment, the cops thought they may have broken some money laws. Bithumb told Kim that she already had the money to pay back the loan.

Not to mention, many platforms had trouble with business and forgot to renew their registrations, which got them kicked off the country’s registry. This evidence shows that South Korea prioritizes user protection.

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