[Exclusive] 13.9 Billion Embezzled Yet Still Neglected... KCSC Fails to Review 'Blocking Requests' [Coin Lawless Zone] ④

No Response Despite Three Requests
Repeated "Review Suspension" in 2022 and 2023
Losses Accumulate While Waiting Years for Court Decisions

"Due to the significant price difference between cryptocurrencies in China and Korea, we agreed to use clients' money to purchase cryptocurrencies, convert them into cash, and then share the remaining arbitrage profits. Over the course of 416 transactions, we sent approximately 13.9 billion won by purchasing Ethereum and other cryptocurrencies on cryptocurrency exchange A in China and transferring them to the defendant’s account wallet at cryptocurrency exchange B in Korea, thereby engaging in foreign exchange work as a business." (June 25, 2025, Seongnam Branch of Suwon District Court)

As the evolution of crypto asset crimes accelerates by the second, investigative and financial authorities have launched a comprehensive crackdown. However, it has been confirmed that the Korea Communications Standards Commission (KCSC)—formerly the Korea Communications Commission (KCC)—which is responsible for blocking access to illegal online distribution networks and unregistered overseas exchanges, has failed to fulfill its regulatory role through administrative sanctions.

According to materials submitted to Assemblywoman Lee Juhee’s office of the Democratic Party of Korea by the KCSC on July 9, requests for cooperation such as access blocking measures against unregistered foreign virtual asset service providers by the Financial Intelligence Unit (FIU) (August 7, 2025; August 22, 2025; and January 12, 2026) were left unattended for nearly ten months after the initial request. This was due to the committee’s prolonged paralysis, caused by a leadership vacancy and conflicts between the ruling and opposition parties over member recommendations. The KCSC stated, "On June 19, we requested the submission of materials to verify the facts regarding this matter."

The neglect of illegal overseas exchanges is not merely a result of the committee’s paralysis. The outcome was no different in 2022 and 2023, when meetings were held as usual. At the time, even though the FIU detected violations of the Specific Financial Information Act and requested the blocking of unregistered overseas virtual asset exchanges, the committee did not issue a single access-blocking order, repeatedly opting for a blanket suspension of deliberations.

According to the minutes of the 81st meeting of the Telecommunications Review Subcommittee in 2022, the FIU requested deliberations on a total of 47 cases. These were clear illegal activities, as these operators provided virtual asset trading platforms to the general public via internet sites or mobile apps without reporting to the authorities. However, the committee members shifted responsibility to law enforcement and refused to block access. One member said, "The Seoul Metropolitan Police Agency is investigating, so shouldn’t we wait for the results? That’s why I think we should defer the decision—in other words, suspend deliberation," thereby proactively rejecting the review. Another member concurred, saying, "Since a police investigation is ongoing, wouldn’t it be better to temporarily suspend deliberation given these circumstances?" Yet another member agreed, adding, "I believe it is better to suspend deliberation until the investigation results are released." As a result, the chairman declared, "This matter will be decided as a full suspension of deliberation," thereby shelving the agenda.

This administrative neglect was repeated verbatim the following year. According to the minutes of the 85th meeting of the Telecommunications Review Subcommittee in 2023, the committee took the same stance on six additional operators and a total of 15 new cases. One member asked, "Substantively, there’s no difference from the decision to suspend deliberation on December 5 last year. There are just more sites now, right?" and continued, "Since we suspended deliberation last time, making a different decision now would undermine consistency and credibility, so I think it’s right to suspend deliberation again." Despite the increase in illegal sites, the committee once again halted deliberation, citing consistency based on last year’s inaction. Another member echoed, "I support suspending deliberation in line with precedent," and the chairman decided on a full suspension of deliberation.

The problem is that it takes years for the judiciary to reach a final decision. In the meantime, the committee’s paralysis, compounded by repeated suspensions of deliberation, has effectively opened a loophole for fraudsters. These criminals exploit lax authentication procedures at unregistered overseas exchanges to transfer funds abroad within hours, while the committee, using ongoing investigations as an excuse, has failed to implement any substantive blocking measures.

Experts unanimously agree that a fast-track system is needed to immediately block access to unregistered exchanges. Attorney Jung Youngki of Kim & Chang stated, "Although authorities request that the KCSC block overseas exchanges, administrative agencies are reluctant to take immediate action without explicit legal grounds under current law. To bridge the gap between frontline enforcement realities and legislative frameworks, a fast-track system for close administrative cooperation must be established."

Attorney Kim Taerim, managing partner at AXIS, emphasized, "The KCSC’s grounds for suspending deliberation should apply when a lawsuit has been filed with the court, not during the investigative stage. Waiting for a ruling, which takes years, only increases the harm suffered by users. The FIU has developed indicators to determine whether an operator is engaged in unregistered illegal business. The KCSC can use these indicators to preemptively block suspicious sites and then provide operators an opportunity to explain themselves after the fact—a structure that would make the fast-track system effective."

This content was produced with the assistance of AI translation services.