South Korea Cracks Down on Unregistered Crypto Exchanges

Enforcement Channels

South Korea's Financial Intelligence Unit (FIU) has ordered a ban on 27 unregistered overseas crypto exchange platforms, including KuCoin and MEXC, due to concerns over unlicensed trading and high fees. The move aims to protect users from potential losses and disrupt illicit activities. Key exchanges affected include Phemex, BingX, and BitMart.

Background

This is not the first time the FIU has taken action against unregistered exchanges. In March 2025, Google Play restricted 17 platforms, including KuCoin and MEXC, following a request from the FIU. The ban targets unregistered exchanges that regulators consider to be operating locally in South Korea.

Legal Exposure

Operating without registration can result in up to five years' imprisonment or a fine of up to 50 million won. The potential penalties add legal exposure to the operational restrictions.

Fees and Withdrawals

The FIU has also highlighted the issue of high fees charged by unregistered exchanges. A June probe by the Digital Asset eXchange Alliance (DAXA) and registered operators found that flagged exchanges charged average fees of 1.5% to 10%, compared to an average of 0.16% at South Korea's five largest won-based exchanges.

The ban is part of a shift in South Korea's crypto regulation, focusing on website access, exchange, and app distribution as enforcement levers. The country's digital-asset policy has also developed on other fronts, including a review of Ripple's Korea partnership with Meritz. The FIU urges customers holding assets on affected platforms to withdraw them immediately, while acknowledging that access blocks could make withdrawals harder.