South Korea moved to shut down 11 local crypto exchanges over their involvement in illicit activities
After the Financial Services Commission (FSC) discovered some illegal activities and prepared to introduce stricter regulation, it ordered medium-sized crypto exchanges in South Korea to shut down.
South Korea’s top financial regulator is shutting down a slew of local crypto exchanges
Mid-sized crypto exchanges shut down amid FSC inspection
At present, according to the announcement, 11 exchanges that have used counterfeit accounts will most likely close business as FSC plan to stop their transaction and notify illegal activities to the prosecution and the police.
The names of the exchanges are yet to be revealed; however, they will not be approved by the FSC to operate. So we’ll know soon enough.
Industry observers are already predicting a chain of crypto exchanges shutting down by the end of the year as most exchanges – except for crypto giants Upbit, Bithumb, Coinone, and Korbit – have failed to open up real-name accounts for customers, which is a prerequisite for business operation. In addition, several mid-sized exchanges have announced plans to close their services or businesses.
It is known that Darlbit and Bitsonic are among several Korean digital asset trading platforms that have recently made announcements about business closures. Thus, Darlbit will go out of business on July 15 after notifying customers earlier last month that it would stop deposit and withdrawal services. Meanwhile, Bitsonic’s shutdown notice is quite simply that it will temporarily stop providing services in a bid to renew service systems.
“Once we are done with the renewal, we expect to achieve Information Security Management System (ISMS),” the company said.
Fortunately, Upbit and Bithumb, the two largest cryptocurrency exchanges in the country, have been spared the crackdown for strictly complying with Korean regulations.
It is known that ISMS is a set of procedures to manage customer’s data by pro-actively limiting any security breach. It is another prerequisite needed for exchanges to operate in Korea. But questions remain whether it is a temporary shutdown measure.
“Local exchanges must finalize getting approval from the FSC by September 24 for business operation. But the company said it would get ISMS only after it pauses services from August 6 to November 30,” the statement stated.
According to market insiders, since the timeline does not add up and takes a considerable amount of time to achieve ISMS, Bitsonic is in de facto shutdown.
Following this crackdown, regulatory controls will extend beyond local crypto businesses. By Sept. 24, all cryptocurrency exchanges using Korean currency must register with the Korea Financial Intelligence Unit (KFIU) under the nation’s new regulation to prevent money laundering.
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