South Korea Cracks Down on Crypto Exchanges, Leaving Users in Limbo

South Korea Cracks Down on Crypto Exchanges

South Korea has ordered the blocking of 27 crypto websites, including KuCoin and MEXC, due to unregistered operators. The Financial Intelligence Unit (FIU) plans to provide withdrawal guidance through DAXA, a Korean exchange industry group, with operators' cooperation.

Background

The crackdown comes after South Korea's communications standards regulator made the decisions following two deliberations on Oct. 6-7, at FIU's request. Foreign providers serving Korean customers face the same registration requirements as domestic businesses, including certification under Korea's Information Security Management System (ISMS), and they consider Korean-language websites, marketing aimed at Koreans, and support for won payments when assessing whether a foreign provider is doing business in the country.

The website block can interfere with reaching an account and requesting a withdrawal, causing inconvenience for existing users. FIU acknowledged that blocking could cause withdrawal restrictions or other inconvenience for existing users. Users with balances on those platforms still need to know how to reach their accounts and complete transfers when domestic website access is restricted.

Response from FIU

FIU plans to provide detailed withdrawal methods and procedures through DAXA, a Korean exchange industry group, with the operators' cooperation. That support is intended to address inconvenience caused by website blocking, but the announcement still leaves its delivery as a future commitment.

Conclusion

The South Korean government's crackdown on unregistered crypto operators raises concerns about the future of cryptocurrency adoption in the country. With the blocking of 27 websites, existing users are left in limbo, waiting for guidance on how to withdraw their assets.