South Korea is cracking down on crypto exchanges that have allegedly operated without adhering to the country’s financial regulations. According to a report by local media outlet Hankyung, the Financial Intelligence Unit (FIU) of the Financial Services Commission is considering sanctions against exchanges that have not reported as virtual asset service providers (VASPs) under the country’s Specified Financial Information Act.

The FIU is currently investigating a list of exchanges and consulting with related agencies to determine appropriate sanctions, such as blocking access to the exchanges. Among the exchanges under scrutiny are BitMEX, KuCoin, CoinW, Bitunix, and KCEX, which are accused of providing services to South Korean investors without going through the country’s compliance process.

Under South Korean laws, operators of crypto sales, storage, brokerage, and management are required to report to the FIU. Failure to comply can result in criminal penalties and administrative sanctions. The FIU is also working with the Korea Communications Standards Commission to block access to the exchanges on the list.

In addition to foreign exchanges, South Korean crypto exchanges are also facing scrutiny over suspicions of financial misconduct. Bithumb, one of the largest exchanges in the country, was recently raided by prosecutors following allegations that its former CEO embezzled company funds to purchase an apartment. Bithumb has denied these allegations, stating that the CEO had already taken a loan to repay the funds.

There have also been rumors of intermediaries being paid to list projects on Bithumb and Upbit, another major South Korean exchange. While Upbit has denied these rumors and demanded the media outlet to disclose the list of projects that paid brokerage fees, the incident has raised concerns about the transparency and fairness of the listing process.

As South Korea continues to crack down on non-compliant exchanges and investigate potential financial misconduct, the country’s crypto industry is facing increased scrutiny and regulation. This highlights the importance of adhering to financial regulations and maintaining transparency in the crypto space.