Up to 11 cryptocurrency exchanges in Korea are planning to shut down after their deposit accounts were linked to fraudulent activities.
South Korea’s FSC (Financial Services Commission) is planning to stop transactions at 11 cryptocurrency exchanges in the country and notify law enforcement of their illegal activities, Korea Herald reports.
The move follows comprehensive inspections by the FSC on accounts held by VASPs (virtual asset service providers). In July, the regulator said it found that 14 VASP deposit accounts linked to fraudulent or fictitious account activities.
The 11 exchanges that have used fraudulent deposit accounts are expected to shut down, as it will likely not be possible for them to obtain approval from the FSC to continue to operate after 24 September, the deadline set for crypto exchanges to be registered with KoFIU.
Most crypto exchanges are expected to have to close later this year, as the vast majority of them have not managed to secure partnerships with banks as needed to meet real-name account requirements being imposed under the new rules.
Korea Herald says several mid-sized exchanges have already announced plans to shut down. Darlbit closed its doors on 15 July, while CPDAX said it will stop services from 1 September.
Another exchange, Bitsonic, has said it will temporarily stop providing services to update its systems, in order to obtain ISMS (Information Security Management System) certification, which is one of the requirements for registration under the new rules.
