Even though South Korea is one of the most important countries when it comes to cryptocurrency, it still has a lot of work to do. Regulators have recently begun cracking down on exchanges which engage in malicious behavior. As a result, three trading platforms have been investigated thoroughly by the FSC. It’s a very interesting development, and one that will have a positive long-term effect on the cryptocurrency industry as a whole.
South Korean Exchanges in the hot seat
While most cryptocurrency users are familiar with major South Korean exchanges such as Upbit, Bithumb, and Korbit, there are a lot of smaller trading platforms as well. Unfortunately, it appears not all of those platforms have honest intentions as of right now. Three trading platforms currently find themselves in the crosshairs of South Korea’s Financial Services Commission. With an official investigation underway, things are not looking all that great for these three platforms.
Yonhap News reports that “illegal circumstances” have caused the FSC to investigate these three trading platforms. It seems the companies are suspected of using customer funds to complete cryptocurrency trades. Doing so without the consent of the users themselves is a very troublesome development, as there is no good reason for it.
Moreover, Yonhap claims that some of the smaller exchanges have resold customer accounts to other platforms to manage personal transactions. It sounds strange, but it seems all three exchanges tried to make their own transactions appear different from what they were in reality. Whether this was done to avoid taxes, avoid suspicion, or skew their overall reporting remains to be determined.
With the Financial Services Commission’s Financial Intelligence Unit investigating the matter, it will be interesting to see what the investigation turns up. The main reason for this investigation is the need to look into potential money laundering charges. It seems these transactions passed through various South Korean banks, including Kookmin Bank, Shinhan Bank, and Woori Bank, among others.
One detail of this investigation has been made public as of right now. It seems the Financial Intelligence Unit uncovered the transfer of funds from one exchange “customer” to the account of a proxy representative. For now, it remains unclear which exchange processed this particular transaction, but it is evident this type of behavior needs to be addressed sooner rather than later. The transaction has been frozen by the FSC until the investigation concludes.
It is evident this type of behavior is absolutely unacceptable. There is no good reason for any cryptocurrency exchange to engage in fraud, embezzlement, or money laundering – especially not when using customer accounts without alerting the customers themselves. Identifying suspicious transactions in the world of cryptocurrency is a pressing problem, yet there is a great need to do so.