South Korea To Probe OKX Amid Crypto Crackdown, What’s Next?

6 views 10:15 am 0 Comments February 7, 2024

Story Highlights

  • South Korea investigates OKX for allegedly operating without proper registration in the country.
  • OKX faces scrutiny for promoting services, including ‘OKX Jumpstart,’ to Korean investors.
  • Financial authorities intensify crackdown on undeclared VASPs, including foreign exchanges targeting Korean investors.

South Korea’s financial authorities have launched an investigation into OKX, a major global cryptocurrency exchange, following allegations of operating without proper registration in the country. Notably, the move comes as part of a broader crackdown on undeclared virtual asset providers (VASPs) in South Korea.

Meanwhile, the exchange, known for its significant trading volume worldwide, faces scrutiny for allegedly promoting its services, including the ‘OKX Jumpstart’ platform, to Korean investors via Telegram influencers.

South Korea To Investigate OKX’s Operations

A recent report from South Korean media outlet News 1 and industry sources indicate that OKX has come under scrutiny for its alleged operations in South Korea without proper registration. The Digital Asset Exchange Association (DAXA), a consortium of South Korea’s top cryptocurrency exchanges, reported OKX to local authorities for potentially offering services to Korean investors without complying with regulatory requirements.

Meanwhile, the exchange’s promotion of its Jumpstart program through Telegram influencers, reportedly paid for by OKX, has raised concerns about targeting Korean users. Notably, South Korea’s regulatory framework mandates that all cryptocurrency exchanges register with authorities before providing trading services to local investors.

In addition, foreign exchanges are required to register locally or withdraw Korean language services to operate legally in the country. The Financial Intelligence Unit (FIU), under the Financial Services Commission (FSC), is expected to initiate an investigation into OKX following DAXA’s report, underscoring the government’s commitment to enforcing regulatory compliance in the crypto industry.

Strict Regulation & Increased Scrutiny

South Korea’s Financial Services Commission (FSC) has introduced stricter regulations for virtual asset service providers (VASPs), emphasizing rigorous executive recruitment processes to bolster industry oversight. Additionally, plans are underway to combat crypto market manipulation and illegal trading, with potential life imprisonment for violators earning over 5 billion won unfairly. Notably, the news comes amid Bitsonic CEO facing 7-year prison for conducting a crypto fraud.

According to local reports, the Financial Supervisory Service is preparing a regulatory roadmap, mandating continuous surveillance for abnormal transactions by April and establishing self-regulatory measures. Notably, a recent meeting with VASP representatives discussed the roadmap’s implementation, stressing the need for comprehensive organizational and control systems to stabilize the market.

Director Lee Bok-hyeon emphasized the importance of eradicating illegal activities to foster industry development, urging active surveillance to maintain market integrity.

However, DAXA’s action against OKX highlights the collaborative efforts of South Korea’s leading cryptocurrency exchanges to maintain regulatory compliance and integrity within the local crypto ecosystem. As South Korean authorities intensify their crackdown on undeclared VASPs, including foreign exchanges targeting Korean investors, the outcome of the investigation into OKX could have significant implications for the broader cryptocurrency landscape in the country.