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South Korea to inspect crypto exchanges for compliance and fraud

GrafaGrafa2024/09/05 05:05
By:Liezl Gambe

South Korea’s Financial Supervisory Service (FSS) is set to launch a series of inspections on cryptocurrency exchanges to root out illegal activities and enforce the newly implemented Virtual Asset Users Protection Act.

This move comes after stricter regulations were introduced in July, aimed at tightening oversight and safeguarding digital assets in the fast-evolving crypto market.

The FSS said the inspections would target any suspicious transactions and ensure that exchanges are following the rules for protecting users' virtual assets and keeping proper transaction records.

“We are committed to establishing market order through strict penalties for illegal activities uncovered during our inspections,” the agency noted, adding that it may consider changes to the regulations if necessary improvements are identified.

The initial focus will be on two cryptocurrency exchanges that use the Korean won, following "unusual cases" that emerged during prior reviews.

The new law allows for heavy penalties, including life imprisonment, for those found illegally profiting over 5 billion won (about $3.7 million) through unauthorised virtual asset transactions.

In addition to these two exchanges, three other cryptocurrency platforms and a wallet provider are also on the FSS’s radar.

The regulator indicated that other exchanges could also face scrutiny if any issues or complaints arise.

This marks the first major enforcement action since the tougher regulations took effect, underscoring the government's determination to bring more oversight and transparency to the crypto sector.

South Korea has been stepping up efforts to regulate the cryptocurrency industry amid concerns over potential fraud and money laundering.

By conducting these inspections, the FSS aims to ensure compliance across the board and send a clear message that illegal practices will not be tolerated.

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