South Korea has been at the forefront of the cryptocurrency industry, with a thriving market and a supportive government. However, recent reports suggest that the country’s financial authorities are cracking down on crypto exchanges that have not complied with the necessary regulations.

According to local media Hankyung, the Financial Intelligence Unit (FIU) of the Financial Services Commission is investigating a list of exchanges for allegedly operating without reporting as virtual asset service providers (VASPs) under the country’s Specified Financial Information Act. This act requires crypto exchanges to report to regulators and comply with the necessary regulations.

The FIU is also considering sanctions against these exchanges, including blocking access to their platforms. This move comes as the regulator aims to crack down on exchanges that have been providing services to South Korean investors without going through the proper compliance process.

One of the exchanges on the FIU’s list is KuCoin, which has responded by stating that they are closely monitoring regulatory developments and believe that compliance is essential for the healthy and sustainable growth of the industry.

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 currently consulting with the Korea Communications Standards Commission on how to block access to these non-compliant exchanges. This move is part of the country’s efforts to regulate the crypto industry and protect investors from potential financial misconduct.

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 of embezzlement by its former CEO.

There have also been rumors of intermediaries getting paid to list projects on exchanges like Bithumb and Upbit. However, Upbit has denied these claims and demanded that the media outlet disclose the list of projects that allegedly paid brokerage fees.

As South Korean regulators continue to tighten their grip on the crypto industry, it is crucial for exchanges to comply with the necessary regulations to ensure the long-term growth and sustainability of the market.