South Korea Takes Strong Action! Unlicensed Exchanges Face Potential Five-Year Prison Sentences, KuCoin and MEXC Already Banned

South Korea Blocks Unlicensed Operators

The South Korean Financial Services Commission (FSC) recently announced that it has blocked the applications of 14 cryptocurrency exchanges in the Apple Store, including KuCoin and MEXC. According to a report released on April 14, these exchanges have been accused of failing to register as compliant overseas virtual asset service providers (VASP) in South Korea and are therefore considered to be operating illegally.

The report indicated that the South Korean Financial Intelligence Unit (FIU) will continue to promote the blocking of such operators’ applications and websites to prevent money laundering activities and protect users from potential losses.

This action to block the Apple Store follows the blocking of several unregistered exchange applications on Google Play on March 26. At that time, KuCoin and MEXC were also on the blocked list. The FSC has announced that there are 22 unregistered platforms operating in South Korea, 17 of which have already been blocked on Google Play.

The FSC stated that users will no longer be able to download these applications from the Apple Store, and existing users will also be unable to perform updates. Furthermore, the agency emphasized:
“Undeclared business activities are subject to criminal penalties, with a maximum sentence of five years in prison and a fine of up to 50 million Korean Won (approximately 35,200 USD).”

It is important to note that although major global exchanges such as Binance, OKX, and Bybit are not on this sanctions list, it does not mean that these exchanges are compliant VASP operators in the region. Currently, it is reported that there are only five local exchanges operating in compliance in South Korea: Upbit, Bithumb, Coinone, Korbit, and GOPAX.

According to a report by the Korea Economic Daily on March 21, the FIU and FSC were considering imposing sanctions on cryptocurrency exchanges that had not completed local registration, including measures to block their application access. Under current regulations, all operators providing cryptocurrency trading, brokerage, management, or custody services in South Korea must complete a registration report with the FIU. Failure to comply will result in legal penalties.

This tightening of regulations comes as South Korea’s cryptocurrency industry enters what is termed the “saturation stage.” As of March 31, the number of users of cryptocurrency exchanges in South Korea exceeded 16 million, accounting for more than 30% of the national population. Industry insiders estimate that this figure could surpass 20 million by the end of 2025.

Additionally, according to data from March 27, over 20% of public officials in South Korea hold cryptocurrencies, with total assets amounting to 9.8 million USD. The types of cryptocurrencies held include Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), and Dogecoin (DOGE).