Eleven cryptocurrency exchanges in South Korea to shut down amid r…

The Financial Services Commission of South Korea plans to shut down eleven mid-sized local cryptocurrency exchanges in the country. — Image by Free-Photos from Pixabay

Key Takeaways

11 cryptocurrency exchanges will close down in South Korea
The Financial Services Commission accuses them of conducting illegal activities
September 24 is the last date for exchanges to ger FSC approval

YEREVAN (CoinChapter.com) – The Financial Services Commission of South Korea, the country’s top financial regulator, plans to shut down eleven mid-sized local cryptocurrency exchanges. This is because it has allegedly caught them in conducting illegal activities.

The commission also plans to implement stricter regulations followed by exchanges hoping to operate in the country.

The 11 South Korean exchanges that have used fraudulent collective accounts will most likely close business. Local exchanges must finalize getting approval from the FSC by September 24 for business operation. https://t.co/kX3nJo8SBX
— Wu Blockchain (@WuBlockchain) August 2, 2021

Accused Crypto Exchanges to Shut Down

The 11 exchanges accused of fraud will probably shut down. The Financial Services Commission will stop the operations of these 11 exchanges and will bring their illegal activities to the knowledge of the police.

Although the names of the exchanges remain undisclosed, they will have a hard time getting approval to operate in the country, sources said. The crackdown by the commission seems to be serious. Through this, the commission also intends to send out a strong message.

Cryptocurrency exchange shutdown expected

The decision of the FSC comes as no surprise to the industry insiders.

Back in April, Eun Sung-soo, the South Financial Services Commission of South Korea chairman, had warned about this day.

Sung-soo had said that about 200 crypto exchanges risked getting shut down before September. The warning was based on the new anti-money laundering laws (AML) that came into force in 2020. The AML covered cryptocurrencies as well.

The new laws mandate that all crypto exchanges implement all AML guidelines and work with local banks or risk closure. However, at the time of AML implementation, just 4 of the 200 exchanges worked with the local banks.

Other than Upbit, Bithumb, Coinone, and Korbit, all other exchanges had failed to ensure that they had registered their customers with real names and details.

Besides those that risked mandatory closure, many had announced plans to shut down.

Cryptocurrency Exchanges opt-out of South Korea

As the news of the new implementations spread, some crypto exchanges decided to exit the country rather than try to adjust. Giants like Binance and OKEx were among the first to shut operations.

Allbit, the decentralized exchange launched in 2018, followed suit.

The Ozys platform made a dramatic exit by announcing that doing business in South Korea had become impossible.

Darlbit also shut its doors in July after warning customers a month prior that it was stopping deposit and withdrawal services.

CPDAX was next in line to announce that it would cease operations.

“It is not a temporary but a permanent measure to close business. Those who possess cryptocurrencies in the account must withdraw them before 3:00 p.m. on August 31”
the company said.

Adapt or perish

Whether they like it or not, cryptocurrency exchanges must adapt to the new directives or wind up operations.
To be allowed to operate, they must obtain Information Security Management System (ISMS). ISMS contains a set of procedures that assist in managing customers’ information without the risk of compromising their information.

Those exchanges that fail to get approval from the Financial Services Commission will shut shop by the 24th of September.
Despite pleas, the FSC is unlikely to offer any further extensions on the deadline.

However, these regulatory restrictions do not apply to local cryptocurrency exchanges alone. All foreign cryptocurrency exchanges must register with the Korea Financial Intelligence Unit (KFIU) by September 24.

Failing to do so will result in them closing down. Additionally, they may face criminal charges.

Meanwhile, the clock is ticking.