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| The Korean website of MEXC, one of the largest crypto exchanges in China / Screenshot from MEXC |
By Lee Min-hyung
Overseas cryptocurrency exchanges are engaging in illegal sales activities here without reporting their businesses to financial watchdogs.
According to the Korea Financial Intelligence Unit, a total of 16 foreign crypto exchanges _ such as MEXC and KuCoin _ have allegedly violated the Financial Information Act by continuously operating their businesses without meeting the requirements to do so under the legal framework.
Last year, the Financial Services Commission urged a group of 27 overseas exchanges to report their business before the act was to take effect on Sept. 25. The authority also notified them that they are not allowed to run their businesses unless they obide by the regulation.
Some of them _ such as Binance _ closed down their Korean business in line with the regulatory guidelines. But another 16 exchanges turned out to continue generating profits here without doing so, according to the intelligence unit.
The authority requested the Korea Communications Commission to block access to their websites and mobile apps in Korea. The commission will hold an internal discussion and decide whether to accept the request. It remains to be seen when the final decision will be made, but it will take at least a couple of weeks, during which period, the exchanges can continue operating their trading platforms here.
Industry officials said that authorities should take stern measures against such illegal business activities, as the situation raises claims that local exchanges that do abide by the guidelines are at a disadvantage.
"Most local crypto exchange operators team up with the government to build a more reliable crypto ecosystem, even if specific legal frameworks have not been introduced so far," an industry source said. "We expect the authorities to come up with specific measures to root out illegal activities for the healthy growth of the industry."
