South Korea seizes 40 illegal exchanges! Inviting influencers to promote activities that cross the red line— the Financial Supervisory Service issues an emergency alert.

South Korea’s Financial Intelligence Unit uncovered approximately 40 unregistered illegal virtual asset service providers and referred them to law enforcement. The authorities issued an investor warning to prevent money laundering and fraud risks.

South Korea Uncovers Approximately 40 Illegal Operators, FIU Issues Warning

South Korea’s Financial Intelligence Unit (FIU) recently stated that it has referred approximately 40 unregistered virtual asset service providers (VASPs) to law enforcement agencies for investigation, while simultaneously issuing an investor warning, urging the public to avoid using unregulated platforms to reduce risks such as fraud, hacking attacks, personal data leaks, and money laundering.

Source: FIU South Korea’s Financial Intelligence Unit (FIU) recently stated that it has referred approximately 40 unregistered virtual asset service providers (VASPs) to law enforcement agencies for investigation.

The FIU, under South Korea’s Financial Services Commission (FSC), is primarily responsible for anti-money laundering and financial crime prevention. According to South Korea’s Act on Reporting and Using Specified Financial Transaction Information, any business providing virtual asset trading, custody, transfer, or exchange services in South Korea must register with the FIU and obtain Information Security Management System (ISMS) certification.

This regulation also applies to overseas exchanges. As long as a platform actually provides services to South Korean residents, even if the company is established abroad, it must comply with South Korea’s registration requirements. The FIU emphasized that currently only 28 operators have completed legal registration, and other unregistered platforms that continue to solicit South Korean users will be considered illegal operations.

Overseas Platforms Solicit Users via Social Media and Influencers

The FIU investigation found that some unregistered operators are still targeting South Korean investors through Telegram, KakaoTalk open chat rooms, YouTube, social media, and search ads, even inviting influencers and content creators to help promote, using high returns, low fees, or special coin trading as incentives to attract users to open accounts and deposit funds.

Some platforms, while marketing to South Korean users, deliberately fail to provide full Korean-language customer support, or package cross-border services with English support, attempting to reduce external attention to their actual operations in the South Korean market.

The FIU believes that as long as a platform engages in activities such as soliciting South Korean users, providing trading services, or facilitating asset transfers or exchanges, it already possesses the characteristics of a virtual asset service provider and must complete registration in accordance with the law.

Additionally, regulators have noted that some private money exchange operators provide stablecoin-to-Korean won conversion services to foreign students, tourists, and foreign workers. Such underground transaction networks lack customer identity verification and anti-money laundering controls, and may be used to circumvent foreign exchange management, conceal fund sources, or facilitate cross-border movement of illegal funds.

Unregistered Platforms Lack Protection, Investors Face Difficulty Seeking Compensation

The FIU warns that platforms that have not completed registration are not fully subject to the Virtual Asset User Protection Act and the Act on Reporting and Using Specified Financial Transaction Information. Once investors use such services, they face higher risks to fund security and legal exposure.

Regulators pointed out that such platforms may lack robust information security mechanisms, increasing the likelihood of account theft, personal data leaks, and asset theft by hackers. At the same time, if platforms fail to implement customer due diligence, suspicious transaction monitoring, and fund source tracking, they could also become channels for criminal groups to launder money or conceal illegal proceeds.

For ordinary investors, the biggest risk lies in difficulty seeking compensation. If unregistered operators fail to deliver crypto assets as agreed after receiving funds, or suddenly cease operations or restrict withdrawals, investors often find it difficult to recover losses through formal regulatory mechanisms. The FIU also reminds that some platforms may charge undisclosed high fees during transactions, causing users to bear additional costs unknowingly.

South Korea Accelerates Tightening of Cross-Border Virtual Asset Regulation

This enforcement action comes at a time when South Korea is strengthening cross-border digital asset regulation. The South Korean government plans to officially implement a new cross-border virtual asset transfer system this December. In the future, businesses providing cross-border digital asset transfer services must register with the Ministry of Economy and Finance and report transactions through the Bank of Korea’s foreign exchange monitoring system.

In recent years, the South Korean crypto market has seen active trading, with stablecoin payments, cross-border remittances, and overseas exchange services expanding rapidly. This has heightened regulators’ concern over capital outflows, illegal currency exchange, and money laundering risks. The FIU has repeatedly stressed that unregistered operators must not provide virtual asset services to South Korean residents, and related solicitation activities may face criminal liability.

The FIU urges investors to confirm whether an operator is on the official registration list before using any exchange or virtual asset platform, and to avoid trading through social media links, recommendations from strangers, or unverified private exchange channels. As South Korea continues to push forward with cross-border reporting, anti-money laundering reviews, and platform registration regimes, unregulated overseas platforms will face stricter enforcement pressure.

This content was generated by a Crypto Agent aggregating information from various sources, reviewed and edited by Crypto City. It is currently in the training stage and may contain logical deviations or information errors. The content is for reference only and should not be considered investment advice.