South Korean FSC denies plans to shut down 11 crypto exchanges

Published at: Aug. 2, 2021

South Korea’s top financial regulator, the Financial Services Commission (FSC) has denied reports on rumored plans to shut down a dozen local cryptocurrency exchanges due to fraudulent activity.

The FSC told Cointelegraph on Aug. 9 that the authority does not plan to suspend operations of several smaller local crypto exchanges due to involvement in operating fraudulent collective accounts. A previous report by local news agency The Korea Herald suggested that the authority was planning to shut down at least 11 mid-sized crypto exchanges in South Korea, citing anonymous sources.

A spokesperson for the FSC elaborated that its Korea Financial Intelligence Unit (KoFIU) is not looking to close down the exchanges but rather is looking to freeze the use of fraudulent collective accounts, or borrowed-name accounts on the platforms. “If the 11 exchanges intend to maintain their operations, they are required to open up and use real-name accounts for the purpose of collecting deposits,” the representative stated. The authority refused to disclose the names of exchanges involved in the action.

The news came amid several smaller South Korean crypto exchanges suspending operations recently. Local crypto exchange Bitsonic announced Friday on its official Telegram channel that it would temporarily halt operations, citing “internal and external issues.” Another local crypto trading platform, CPDAX, also said that it would entirely shut down operations as of Sept. 1. Previously, Darlbit exchange also reportedly terminated services after suspending deposit and withdrawal services last month.

Related: South Korea to take action against unregistered crypto exchanges

South Korean crypto exchanges have been under stricter regulatory scrutiny recently as authorities have required local virtual asset service providers to register their businesses until September as well as set up real-name trading accounts and reporting. Particularly, smaller- and medium-sized crypto exchanges have been reportedly struggling to secure licences from appropriate authorities, as opposed to major crypto exchanges like Upbit, Bithumb, Coinone and Korbit.

Larger cryptocurrency exchanges in South Korea have also been facing regulatory issues recently, however. According to Yonhap News, the Seoul Metropolitan Police Agency Monday reopened an investigation into an alleged fraud case involving the former chairman of Bithumb, the largest crypto exchange in South Korea.

Disclaimer: This article was updated at 9:15 am UTC on Aug. 9 to reflect that the FSC didn’t plan to shut down the 11 cryptocurrency exchanges that have been identified to be involved in fraudulent activity.

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Regulation
Cryptocurrency Exchange
Cryptocurrencies
Government
South Korea
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