South Korea’s Financial Intelligence Unit said it will move to block access to 27 websites operated by unregistered virtual asset service providers that were still found to be running illegally in the country. The step broadens an existing enforcement campaign that had previously focused on stopping new app installs and updates through mobile app stores.
The Korea Communications Standards Commission reviewed the cases in two rounds of deliberations on October 6 and October 7, then decided to either terminate service or block access to the 27 sites identified by the FIU. Domestic sites will face service termination, while overseas-based sites will be blocked from being accessed inside South Korea.
Website action follows earlier app restrictions
The FIU said the latest measure applies to sites for which it had requested action and that were confirmed to still be operating. Until now, authorities had mainly tried to contain unregistered operators by preventing them from offering fresh installations or updates of their mobile apps through platforms such as Google and Apple.
By extending the crackdown from app marketplaces to websites, regulators are targeting another route through which users can reach exchanges that have not completed South Korea’s registration process. The FIU described the move as part of a broader effort to respond firmly to illegal crypto business activity.
Registration rules and possible penalties
Under the Act on Reporting and Use of Specific Financial Transaction Information, crypto firms seeking to do business in South Korea must satisfy requirements that include obtaining Information Security Management System certification and reporting to the FIU.
The reporting requirement can also apply to overseas companies if they offer Korean-language services, market to users in South Korea, or support won-denominated payments. Violations can be punished by up to five years in prison or a fine of 50 million won, equivalent to about $36,200 in the source report.
Authorities cite risks to users and unusually high fees
The FIU said investors using unregistered operators may face higher risks because those platforms may lack sufficient safeguards. The agency pointed to possible asset theft, personal data leaks and fraud, and also highlighted fee levels as a concern.
In a June joint probe by the Digital Asset eXchange Alliance, or DAXA, and registered operators, the firms identified in the investigation were charging average trading fees ranging from 1.5% to 10%. That compared with an average fee of 0.16% at South Korea’s five largest won-based exchanges, meaning the unregistered firms’ fees were as much as 62 times higher.
Existing enforcement and the next steps
The FIU said it has already taken several measures against illegal operators, including restricting transactions with unregistered firms, notifying investigative agencies and blocking app installations. It has also told registered virtual asset service providers not to transfer crypto to unregistered operators. Since May 2024, it has restricted crypto purchases and payments made with credit cards at unregistered firms, and a total of 44 illegal crypto operators have been referred to investigative authorities so far.
The agency said website blocking is important because it can limit access once illegal activity is confirmed, even before specific investor losses are identified or an investigation is completed. At the same time, the FIU acknowledged that blocking access could complicate withdrawals for existing users. It said it plans to work with the relevant operators and provide withdrawal guidance and support through DAXA, while continuing to watch for mirror sites, changed internet addresses and newly identified unregistered operators.
Source: en.bloomingbit.io