South Korean authorities are ramping up efforts to regulate the crypto market, focusing on exchanges believed to be operating without proper licensing.

The Financial Intelligence Unit (FIU) of the Financial Services Commission is investigating several platforms, including KuCoin, BitMEX, CoinW, Bitunix, and KCEX, for allegedly providing services to South Korean users without registering as Virtual Asset Service Providers (VASPs).

According to a report by local media outlet Hankyung on March 21, the FIU is contemplating sanctions against these exchanges for not adhering to the country's Specified Financial Information Act, which mandates VASP registration for operators involved in crypto sales, storage, and management. Failure to comply may lead to criminal penalties or administrative sanctions.

As part of its investigation, the FIU is consulting with related agencies and considering measures to block access to the identified exchanges.

An official from the FIU confirmed that discussions are underway with the Korea Communications Standards Commission, which oversees internet regulations, to determine the best approach for implementing access restrictions.

In addition to scrutiny of foreign exchanges, local platforms are also facing allegations of financial misconduct. On March 20, prosecutors raided Bithumb amid suspicions that its former CEO, Kim Dae-sik, embezzled company funds to finance an apartment purchase. Bithumb has denied wrongdoing, stating that Kim had already secured a loan to cover the expenses.

Rumors have also emerged regarding illicit payments to secure listings on South Korean exchanges, particularly Bithumb and Upbit.

Anonymous sources have indicated that some projects paid intermediaries substantial sums to gain access to these platforms. Upbit has responded, demanding transparency from media sources regarding these claims.