South Korea blocks websites of 27 unregistered crypto firms including KuCoin and MEXC

South Korea will block domestic access to the websites of overseas crypto exchanges such as KuCoin and MEXC that have served Korean users without registering with financial authorities. The Korea Financial Intelligence Unit (FIU), part of the Financial Services Commission (FSC), said in a press note on Oct. 13 that the Korea Media and Communications Standards Commission, the country's online content regulator, decided after two review sessions on Oct. 6 and 7 to block access to 27 websites of illegal virtual asset dealers. The step extends earlier measures under which new installs and updates of these firms' apps were blocked on Google's and Apple's app stores.

Sites blocked if based abroad, contracts terminated if in Korea

The targets are the 27 sites still in operation among those the FIU has asked to be blocked. They include a number of overseas exchanges: KuCoin, MEXC, Phemex, XT.com, Bitrue, CoinW, ZoomEX, Poloniex, BTCC, DigiFinex, Pionex, Blofin, Apex Pro, WEEX, BitMart, KCEX and BingX. The rest are P2B, Nonkyc.io, SUPEREX, Xgram, Coinsolution, Sinbad Solution, Tapbit, Coinmy, BigONE and Ubit.

The measure depends on where the server or operator is located. Access from Korea is blocked if they are overseas, while service contracts are terminated if the servers or operators are based in Korea. The FIU said it agreed with the commission that, since operating without registration is itself a violation of the Act on Reporting and Using Specified Financial Transaction Information, access to such websites should be blocked early, even before user losses are confirmed. Going forward, it plans to request a review as soon as illegal operations are detected, without waiting for separate victim reports, and to seek additional reviews of replacement sites if firms change addresses to get around the blocks.

11 exchanges first reported to investigators four years ago

All 27 firms appear on the FIU's list of illegal businesses referred to investigative agencies. That list stood at 40 when the FIU published it on June 24, and grew to 44 after Tapbit, Coinmy, BigONE and Ubit were added on Aug. 31. Eleven of the firms now being blocked, including KuCoin and MEXC, were on the first referral list dated Aug. 17, 2022, and the website block decision came more than four years after that first referral.

The FIU has so far barred registered Korean operators from sending crypto to unregistered firms, and a May 2024 amendment to the enforcement decree of the Specialized Credit Finance Business Act closed off the use of credit cards to buy crypto from unregistered firms. Even overseas firms are treated as operating in Korea, and subject to the same law, if they run a Korean-language website, hold events aimed at Korean customers or support payments in Korean won. Operating without registration carries a penalty of up to five years in prison or a fine of up to 50 million won.

Fees up to 62 times those of Korean exchanges

The FIU said unregistered firms lack security requirements such as Information Security Management System (ISMS) certification, leaving users exposed to hacking and personal data leaks, and could be used to launder criminal proceeds. It said users could suffer fraud losses, such as firms taking payment without delivering crypto or charging high fees without proper disclosure, and that such losses are hard to recover. A joint probe in June by the Digital Asset eXchange Alliance (DAXA) and registered operators found average trading fees of 1.5% to 10% at the unregistered firms identified, up to 62 times the 0.16% average at Korea's five won-based exchanges.

Twenty-eight virtual asset businesses, including Upbit, Bithumb, Coinone, Korbit and Gopax, are currently registered with the FIU, and any other firm doing crypto trading business in Korea is illegal, according to the FIU. It warned that referral promotion, in which people recommend an exchange in return for fees, could be seen as aiding unregistered operations, so those who make referrals could also face criminal penalties.