South Korea’s cryptocurrency industry is bracing for an
impending shakeup as policymakers set their sights on regulation. The
government’s primary objective is to safeguard investors by stamping out any
fraudulent activities that may be lurking within the industry’s dark corners.
While the specifics of these regulations remain unclear, one thing is certain:
change is coming.
FIU Takes Action
South Korea has been actively engaged in the regulation of
its digital asset market. In the latest development, the country’s Financial
Intelligence Unit (FIU) has taken stringent measures against five cryptocurrency exchanges, namely Bithumb Korea, Coinone, Dunamu, Korbit, and
Streami, for their blatant disregard of regulations pertaining to the reporting
of irregular crypto trading.
The exchanges have been found negligent in their duty to monitor and report suspicious transactions diligently, resulting in the
discovery of several instances of irregular trading practices. The detected
irregularities include using borrowed-name bank accounts for transactions
and grossly insufficient internal controls.
Notably, the FIU unearthed one case of a 95-year-old man
engaged in late-night trading of over 30 different types of cryptocurrency,
covertly splitting his money into smaller amounts to avoid detection. In
another instance, a customer repeatedly withdrew money promptly after large
virtual asset deposits had been made, raising suspicion of wrongdoing. On top
of these, the FIU found that one of the board members of a cryptocurrency
exchange was involved in transactions using their spouse’s name, further
underscoring the lackadaisical attitude towards internal controls.
As a result, the FIU has levied substantial fines and issued
disciplinary warnings on the exchanges, with the potential to order further
improvements if the corrective actions taken by the exchanges are deemed
inadequate. The fines amount to a staggering 490 million won, and the exchanges
have been given a strict deadline of three months to address the identified
suspicious transactions.
The neglect of duty by the cryptocurrency exchanges and the
discovery of various irregular trading practices emphasize the urgent need for
stricter regulations and improved monitoring mechanisms to thwart illegal
activities such as money laundering in the crypto market.
