South Korea's anti-money laundering authority is going after 16 foreign crypto firms it says have been operating in the country without proper regulatory approval, a statement published Thursday shows.
The Korea Financial Intelligence Unit (KoFIU), part of South Korea's Financial Services Commission (FSC), said the firms had advertised crypto and offered services to Koreans without obtaining the requisite registration.
The country's registration requirement for crypto firms took effect in September with the enactment of the Financial Transaction Reports Act. Efforts to crack down on the industry have intensified following May's fall of Terraform Labs, founded by Korean native Do Kwon. Prosecutors have raided seven exchanges since Terra's collapse. Earlier this month, the FSC said it will help expedite new rules to rein in the crypto industry.
The KoFIU has notified authorities the 16 firms allegedly violated their "registration duties" and that it plans to alert financial authorities in the countries where the companies are based. Violation of the registration requirements carry a maximum sentence of five years in prison or a fine of up to 50 million South Korean won (US$38,000). The firms will also not be allowed to register as a virtual asset service provider (VASP) in the country for an unspecified period of time.
"The KoFIU has requested the Korea Communications Commission and the Korea Communications Standards Commission to block domestic access to the websites of unregistered VASPs to prevent the use of virtual asset services provided by unregistered entities," the statement said.
Credit card transfers and transfers of crypto assets to and from the unregistered firms will be blocked "to disable their use in domestic market."
The agency also warned crypto users against engaging with unregistered platforms, which could leave users "vulnerable to risks of personal information breach and hacking."