DAXA Identifies Four Unregistered Overseas Exchanges and Requests Police Investigation
Official Korean Language Support, KRW Display, and Reward Payments
Evidence of Illegal Business Activities Targeting Domestic Users Detected
The Digital Asset Exchange Alliance (DAXA) announced that it had identified four overseas virtual asset exchanges that continued to operate business for domestic users without proper registration, and reported these exchanges to the police for investigation on August 31.
This request for investigation aims to respond to illegal business activities by unregistered overseas exchanges in Korea that failed to comply with reporting obligations pursuant to Article 7 of the Act on Reporting and Use of Certain Financial Transaction Information. According to Article 17 of the same Act, conducting business without reporting to the Financial Intelligence Unit (FIU) can be punishable by up to five years of imprisonment or a fine of up to 50 million won.
Upon examining the websites and applications (apps) of the exchanges subject to DAXA's investigation, it was found that they actively engaged in customer acquisition activities, including official Korean language support, displaying transaction prices converted to Korean won (KRW), and login-linked reward payments.
Unregistered overseas exchanges are not under the supervision or management of domestic financial authorities and do not have anti-money laundering (AML) or user protection systems in place. As a result, it is difficult for users to seek recourse if incidents such as withdrawal suspension, service termination, or hacking occur.
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Kim Jaejin, Executive Vice Chairman of DAXA, stressed, “Even if servers or headquarters are located overseas, operating a business for domestic users clearly makes them subject to compliance with the local Act on Reporting and Use of Certain Financial Transaction Information. DAXA will continue to take the lead in preventing market disruption caused by illegal operators and in establishing sound trading practices.”
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