South Korea's Financial Watchdog to Inspect Crypto Exchanges for Illegal Practices

South Koera's Financial Supervisory Service (FSS) announced on Tuesday its plan to initiate an inspection of crypto exchanges to uncover any illegal or unfair practices.

South Korea’s financial regulator will carry out an inspection of crypto exchanges to identify illegal or unfair practices, aiming to ensure compliance and safeguard crypto assets.

The Financial Supervisory Service (FSS) announced the move on Tuesday, marking the first such inspection since the country introduced stricter regulations for crypto exchanges in July under the new Virtual Asset Users Protection Act.

The inspection will cover a wide range of aspects, including detecting any illegal or suspicious transactions and ensuring that exchanges comply with rules for safeguarding virtual assets and maintaining transaction records.

“The FSS will establish market order through stern punishment against illegal activities that may be identified in the process of its inspection, and will push for the revision of regulations if necessary by identifying the areas in the system where improvements are needed,” the agency was quoted as saying by local media.

The FSS said the review will initially focus on two cryptocurrency exchanges based on the Korean won due to some “unusual cases” that were flagged during previous evaluations. The act allows for penalties as severe as life imprisonment for those who illegally profit over 5 billion won ($3.7 million) from virtual asset transactions.

The FSS also disclosed that three additional cryptocurrency exchanges and one wallet provider will be subject to the inspection. The regulator noted that any other exchanges would also be investigated if any issues or complaints arise.

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