Darwin KS Begins Court Fight With FIU Over Virtual-Asset Service Status

Darwin KS, which operates a virtual-asset exchange service for foreign nationals, has begun a legal fight with South Korea’s Financial Intelligence Unit. The central issue is whether the service qualifies as a virtual asset service provider, or VASP, under the Act on Reporting and Using Specified Financial Transaction Information.

At the first hearing at the Seoul Administrative Court, the judges examined Darwin KS’s business structure, how it handles virtual assets and its revenue model, Electronic Times reported on May 22. The court distilled the dispute to whether Darwin KS can be deemed to have directly handled virtual assets.

The FIU had previously concluded that Darwin KS was operating as an unregistered VASP and sent official letters to registered VASPs asking them to stop transactions with the company. Darwin KS then filed a lawsuit seeking to revoke that transaction halt request.

In court, Darwin KS argued that it did not directly store or trade virtual assets and only provided a technology platform. It also said that, because corporate virtual-asset trading is restricted in South Korea, it structured the service around a registered custody provider.

The FIU argued that the buying and selling of virtual assets was taking place and that the business had a fee-based revenue model. On that basis, it said Darwin KS should, in principle, be subject to VASP registration.

Darwin KS also contends that it is unreasonable to classify the company as an unregistered VASP because it received approval for the business through a regulatory sandbox run by the Ministry of Science and ICT.