11 undisclosed Korean-based cryptocurrency exchanges are said to shut down due to alleged fraudulent activities uncovered by Korea’s Financial Service Commission (FSC). Following the circumstances, it will be impossible for these exchanges to get approval from the government institution.
According to The Korea Herald, these unnamed mid-sized Korean exchanges will most likely close shop once the FSC reports their alleged illegal activities to the country’s prosecution and police.
Only large crypto exchanges including Upbit, Bithumb, Coinoin and Korbit managed to comply with the requirements by the FSC. This includes partnering with Korean banks to open real-name accounts for their crypto users.
However, many Korean-based banks are hesitant to partner with crypto exchanges due to the volatile nature of digital coins. Only the big four exchanges mentioned above were able to secure bank partnerships.
Other mid-size crypto exchanges that operate in Korea are also notified to settle their requirements before September 24, 2021 or they will not be approved by the FSC to operate and offer their services in the country.
People Power Party congresswoman Cho Myong Hee appealed to the FSC to extend the filing until December 24. However, FSC authorities are not budging because they have extended the deadline for this and allowed a 6-month grace period in March.
Many of these mid-scale exchanges announced their closure following the announcement. The Korea Herald reported that Darlbit went out of business on July 15 and CPDAX is following suit by September 1.
‘It is not a temporary but a permanent measure to close business. Those who possess cryptocurrencies in the account must withdraw them before 3:00 p.m. on August 31’, CPDAX announced on their official platform.
Bitsonic, another mid-sized Korean exchange, announced through its official Telegram channel that it will temporarily cease operations. The company cited that it’ll temporarily stop providing services in a bid to renew its service systems.
‘Once we are done with the renewal, we expect to achieve Information Security Management System’, the company said in its announcement.
Information Security Management System (ISMS) is another one of the requirements by the FSC for all exchanges that operate in the country. It’s a software that has a list of procedures on how to manage data collected from the customers of Korean exchanges.
Strict regulatory requirements were strongly implemented by the FSC since May this year. This ushered in regulatory scrutiny on all exchanges that operate within the country since the significant rise in altcoin trading during this time.
Moreover, cross-trading practices are also banned by the regulatory commission as part of their requirements for the exchanges. This means that platforms cannot offset buy and sell the orders for the same assets without recording the transactions in their order books.
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