South Korea’s financial regulator, the Financial Supervisory Service (FSS), will inspect crypto exchanges to identify illegal practices following stricter regulations under the Virtual Asset Users Protection Act. The review aims to ensure compliance and safeguard crypto assets, with severe penalties for violations, including life imprisonment for profiting over five billion won illegally.

South Korea’s Financial Watchdog to Inspect Crypto Exchanges for Illegal Practices

South Koera’s Financial Supervisory Service (FSS) announced on Tuesday its plan to initiate an inspection of crypto exchanges to uncover any illegal or unfair practices. This marks the first such inspection since the country implemented stricter regulations in July under the new Virtual Asset Users Protection Act.

The inspection aims not only to detect illegal or suspicious transactions but also to ensure that exchanges comply with rules for safeguarding virtual assets and maintaining transaction records. The agency was quoted by local media as saying:

The FSS will establish market order through stern punishment against illegal activities that may be identified in the process of its inspection, and will push for the revision of regulations if necessary by identifying the areas in the system where improvements are needed.

According to the FSS, the review will initially focus on two cryptocurrency exchanges based on the Korean won due to “unusual cases” flagged during previous evaluations. The act allows for penalties as severe as life imprisonment for those who illegally profit over 5 billion won ($3.7 million) from virtual asset transactions.

The FSS also disclosed that three additional cryptocurrency exchanges and one wallet provider will undergo scrutiny. The regulator emphasized that any other exchanges would also be subject to investigation if any issues or complaints arise.