South Korea investigates ‘OKX Jumpstart’ platform
South Korea’s financial authorities are probing cryptocurrency exchange OKX for allegedly operating in the country without the required registration.
The investigation is part of South Korea’s wider crackdown on virtual asset service providers (VASPs) that have not declared their operations to local regulators.
The focus on OKX, the world’s sixth-largest cryptocurrency exchange in terms of trading volume, includes its promotion of the ‘OKX Jumpstart’ platform to Korean investors through Telegram influencers. Reports from South Korean media claim that OKX may have engaged influencers to target Korean users to turnaround the nation’s regulatory standards.
The Digital Asset Exchange Association (DAXA), which represents South Korea’s major crypto exchanges, also reported OKX to the authorities. The complaint claims that OKX might be offering services to Korean investors without registration with the local financial regulators.
South Korean regulations oblige all crypto exchanges to register with the Financial Intelligence Unit (FIU) under the Financial Services Commission (FSC). Amidst growing scrutiny, the FSC then introduced stricter rules for VASPs, focusing on executive recruitment, market manipulation and trading activities.
The Financial Supervisory Service also proposed an amendment to the country’s credit finance act that prevents citizens from buying cryptocurrencies using credit cards, particularly on foreign exchanges.
The FSC’s proposal stems from growing concerns about the illegal outflow of local funds, money laundering activities, and speculative behavior associated with crypto transactions. The regulatory body aims to limit the exposure of its citizens to the risks involved in buying cryptocurrencies from abroad.
In a legislative notice, the FSC highlighted these concerns and started a public feedback period on the proposed amendment, which will last until February 13. The regulatory body expects the amendment to be reviewed, voted on, and then implemented in the first half.
This move follows a 2021 amendment to the financial reporting law in South Korea, which mandates that users trading on local exchanges must be verified with their real names. Additionally, local trading platforms are required to undergo rigorous licensing processes to offer fiat-to-crypto services, including securing partnerships with local banks.
