South Korea’s FIU seeks blocking of two unregistered crypto operators

South Korea’s Financial Intelligence Unit (FIU), under the Financial Services Commission (FSC), on 30 October requested that the Korea Communications Standards Commission (KCSC) restrict domestic access to websites and mobile apps operated by TetherMax and SuperTrust. The two were among three unregistered virtual asset service providers referred for criminal investigation by the Digital Asset Exchange Association (DAXA). The third, Eegis Ventures, has no website or mobile app for its unregistered business.

The request is not itself a blocking decision. The KCSC will decide whether to impose access blocking under its procedures. Depending on whether the server or operator is in South Korea, the measure may be termination of use domestically or access blocking for overseas services.

Three referrals, two blocking requests

South Korea’s Specified Financial Transaction Information Act requires virtual asset businesses to report before operating. Running an unreported business is subject to up to five years’ imprisonment or a fine of up to KRW 50m. The Act also applies to overseas operators targeting people in South Korea, and reported virtual asset service providers must stop transactions with unregistered operators.

The FIU said unregistered operators are outside the relevant regulatory and supervisory framework, creating money-laundering risks and leaving users with limited recourse after hacking or investment fraud. A DAXA joint intensive inspection in June found average trading fees at detected unregistered businesses of 1.5% to 10%, compared with 0.16% at South Korea’s five major won-denominated exchanges. The FIU said that was as much as 62 times higher.

The action follows the FIU’s 13 October announcement that it had secured domestic blocking of 27 websites operated by unreported virtual asset service providers. The FIU said it would continue working with the KCSC, DAXA and other agencies to seek prompt review of newly detected operators and replacement sites.

FIU warning for users and referrers

The FIU said 28 virtual asset service providers are currently lawfully reported to it. It advised users to verify a provider against the FIU’s reported-operator list before transacting, and to treat claims such as “high returns”, “principal guarantee”, “non-public information” and “global listing” as possible fraud indicators.

Referral and recommendation links carry a separate risk. The FIU said referral activity may be viewed as assisting an unregistered business rather than as simple advertising, potentially exposing the referrer to criminal punishment.

If a provider is confirmed to be unregistered, users should withdraw their own virtual assets and deposits immediately and avoid giving it private keys, login details or identity-document copies. Suspected illegal activity can be reported to police on 112, the FIU at infiu@korea.kr or DAXA at jebo@kdaxa.org.

The next concrete step is the KCSC’s decision under its access-blocking procedures.