Regulators Crack Down on Offshore Platforms
South Korea has stepped up its campaign against unregistered cryptocurrency exchanges, blocking access to 27 foreign-operated platforms in early October. The Financial Intelligence Unit (FIU) announced that the Korea Communications Standards Commission approved these restrictions after reviews conducted on October 6 and 7. The move comes as part of a broader effort to enforce the Act on Reporting and Using Specified Financial Transaction Information, which requires all virtual asset service providers serving South Korean customers to register with the FIU and comply with anti-money laundering (AML) standards.
The newly blocked exchanges include major names such as KuCoin, BitMart, MEXC, Phemex, and DigiFinex—platforms that previously attracted significant South Korean user bases without local registration. According to coindesk.com, these measures will not only block overseas websites but also terminate services for any unregistered domestic operators. This regulatory stance signals a clear message: compliance is non-negotiable for crypto businesses seeking access to South Korean markets.
Only 28 virtual asset service providers have completed the FIU registration process as of October 2023.
No Court Needed for New Website Bans
A key shift in enforcement is that regulators now possess the authority to request website blocks for unregistered crypto activity without waiting for a court decision or evidence of customer losses. This immediate action framework was enabled by the Korea Communications Standards Commission’s recent approval and marks a departure from earlier protocols that required judicial intervention before restricting access.
Previously, authorities often faced delays when pursuing unlicensed platforms because legal proceedings could take weeks or months; now, they can act within days of identifying a violation.
This new approach is already being put into practice: in April 2025, South Korean regulators blocked downloads and updates for 14 unregistered crypto exchange apps from Apple’s App Store and had previously restricted 17 apps via Google Play. The trend toward swift action reflects mounting concerns about investor protection and illicit financial flows through offshore exchanges.
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KuCoin, BitMart Among Blocked Operators
The list of affected platforms reads like a who’s who of global crypto trading: KuCoin, MEXC, BitMart, Phemex, CoinW, BTCC, BingX, and DigiFinex are among those now inaccessible to South Korean users. Notably, only 28 virtual asset service providers are currently registered with the FIU—a stark contrast to the dozens of international firms previously courting Korean traders without oversight.
The headline number is 27 blocked exchanges, but the context is messier: while enforcement is tightening at home, many users have already shifted assets offshore or use VPNs to circumvent restrictions.
The FIU has referred 44 unregistered operators for investigation and has pledged to pursue further blocks if these entities attempt to relaunch under new web addresses. This cat-and-mouse dynamic illustrates both the scale of regulatory ambition and the persistence of non-compliant actors in the market.
Withdrawal Guidance Promised for Stranded Users
For customers who still hold funds on newly blocked platforms, uncertainty looms large. The FIU has warned that traders using unauthorized exchanges may face challenges recovering their assets if access is lost. To address this risk, officials say they will work with the Digital Asset eXchange Alliance (DAXA) and cooperating operators to provide guidance and support for withdrawals—a process that could prove complex if platforms are slow to respond or lack sufficient local infrastructure.
It remains unclear how many users will be able to reclaim their balances quickly or whether all affected exchanges will cooperate fully with withdrawal requests. The regulatory push aims to minimize consumer harm but also underscores the dangers of using unlicensed services in an increasingly regulated environment.
Authorities Target Evasive Exchange Relocations
South Korean regulators have made clear that their crackdown does not end with these initial website blocks. The FIU has stated it will seek further action against any exchange operator attempting to sidestep restrictions by reappearing under new domains or web addresses. In addition to website bans, authorities have begun referring non-compliant firms for criminal investigation—a signal that enforcement will escalate if evasive tactics persist.
This determination comes as courts prepare for new powers effective November 1: Rule 3280 will allow courts to seize and sell cryptocurrencies held on exchanges or in private wallets to satisfy civil claims. Under these rules, court officers can take possession of directly held digital assets even before debtors receive formal notice—an unprecedented step in South Korea’s legal landscape.
The tension between rapid regulatory escalation and persistent user demand for offshore options remains unresolved—and may define South Korea’s crypto policy debates well into next year.
Signals to keep an eye on
If any of the 27 blocked exchanges, such as KuCoin or BitMart, attempt to reopen under new web addresses after the Korea Communications Standards Commission's October 6–7 approvals, the FIU has stated it will seek further blocks immediately; additionally, new court procedures for seizing and selling cryptocurrency to satisfy civil claims take effect on November 1, which will allow creditors to request asset disclosure and enforcement within one week of court orders.
