South Korea to Block Access to 27 Illegal Crypto Exchange Websites, Expanding Crackdown Beyond Apps

South Korea’s Financial Intelligence Unit, or FIU, said on Oct. 13 that it will block access to the websites of 27 unregistered virtual asset service providers operating illegally in the country.

The Korea Communications Standards Commission held two rounds of deliberations on Oct. 6 and Oct. 7 and decided to block access to or terminate service for 27 unregistered virtual-asset operator sites, according to the FIU. Sites with servers or operators in South Korea will be ordered to terminate service, while sites based overseas will be blocked from domestic access. The measure covers sites for which the FIU requested restrictions and that were confirmed to still be operating.

Until now, financial authorities had focused on preventing users from newly installing or updating mobile applications run by unregistered operators through app stores such as Google and Apple. The latest decision extends those restrictions to websites. Overseas exchanges targeted for website blocking include KuCoin, MEXC, BingX, Phemex, XT.COM, Bitrue, CoinW, Poloniex, BTCC and BitMart.

Under South Korea’s Act on Reporting and Use of Certain Financial Transaction Information, crypto businesses seeking to operate in the country must meet requirements including Information Security Management System, or ISMS, certification and register with the FIU. Overseas companies can also fall under the reporting requirement if they provide Korean-language services, market to domestic users or support won-denominated payments. Violations are punishable by up to five years in prison or a fine of 50 million won ($36,000).

Using unregistered operators can expose investors to asset theft, personal data leaks and fraud because they lack adequate investor protections. High trading fees are also a concern. In a joint probe conducted in June by the Digital Asset eXchange Alliance, or DAXA, and registered operators, the exchanges that were flagged charged average trading fees of 1.5% to 10%. That compares with an average of 0.16% at South Korea’s five major won-based exchanges, meaning users could pay as much as 62 times more.

The FIU has responded to illegal operations by restricting transactions with unregistered firms, notifying investigative authorities and blocking app installations. It has also instructed registered crypto service providers not to transfer virtual assets to unregistered operators. Since May 2024, authorities have also restricted crypto purchases and payments through unregistered operators using credit cards. A total of 44 illegal virtual-asset operators have been referred to investigative agencies so far. The website blocking is significant because it allows authorities to restrict access preemptively once illegal operations are confirmed, even before specific investor losses or investigation results emerge.

Still, blocked access could make it harder for existing users to withdraw virtual assets held on those platforms. The FIU said it plans to work with the operators and provide guidance and support for asset withdrawals through DAXA. It also plans to monitor cases in which blocked operators change internet addresses and resume business, and to request additional blocking if new unregistered operators or mirror sites are found.

The FIU said it will continue to work with registered operators and investigative authorities to respond firmly to illegal crypto business activity.