16 unregistered crypto service providers busted by FSS

The Financial Supervisory Service (FSS) has flagged 16 unregistered virtual asset service providers for marketing to domestic investors.

Financial Supervisory Service Governor Lee Bok-hyun speaks at a press event held in western Seoul on Aug. 11. [NEWS1]

The Financial Supervisory Service (FSS) has flagged 16 unregistered virtual asset service providers for marketing to domestic investors.

All are based outside of Korea and have no formal domestic presence, the Korea Financial Intelligence Unit (KoFIU), part of the Financial Services Commission, said Thursday.

They include KuCoin, MEXC, Phemex, XT.com, ZB.com and Bitrue. KuCoin, headquartered in Seychelles, is one of the 10 largest crypto exchanges globally.

These entities carried out business activities intended for domestic consumers as defined by the Act on Reporting and Using Specified Financial Transaction Information, the KoFIU said.

Financial authorities in the jurisdictions hosting the service providers will be informed, credit card processing will be halted in the domestic market and transfers of virtual assets will be blocked.

The 16 companies "were found to have been engaged in business activities targeting domestic consumers by offering Korean-language websites, having promotional events targeting Korean consumers and providing a payment options that support the purchase of virtual assets using credit cards," according to the KoFIU.

Financial regulators informed unregistered companies last July that they had to register their businesses, but the 16 entities were "found to have business operations targeting Koreans without obtaining a registration, and thus the authorities plan to take necessary measures," said KoFIU.

For illegal business activities of unregistered entities, a maximum of five years of imprisonment or a fine of up to 50 million won ($38,000) can be imposed. They can also be restricted from registering domestically for a period of time.

The authorities urged investors to check whether their service providers are legitimately registered, citing risks to personal information and hacking.

"The KoFIU will continue to closely monitor illegal business activities carried out by unregistered entities and maintain close cooperation with relevant authorities," it added.

BY JIN MIN-JI [jin.minji@joongang.co.kr]