DAXA refers 3 unregistered virtual asset operators to investigators

Foreign operators serving domestic users subject to same rules

The Financial Services Commission at Government Complex Seoul in Jongno-gu, Seoul. [Yonhap]
The Financial Services Commission at Government Complex Seoul in Jongno-gu, Seoul. [Yonhap]

Financial authorities have moved to tighten oversight of virtual asset businesses operating outside the regulatory framework, aiming to prevent losses from illegal activities such as money laundering and investment fraud.

The Korea Financial Intelligence Unit (KoFIU) under the Financial Services Commission said Friday it had asked the Korea Communications Standards Commission to block domestic access to the websites and apps of two of the three unregistered virtual asset operators that the Digital Asset Exchange Alliance (DAXA) referred to investigators.

The three operators DAXA referred were Aegis Ventures, TetherMax and SuperTrust. Of these, TetherMax and SuperTrust were included in the access-blocking request. Aegis Ventures was excluded because it operates no website or mobile app for its unregistered business.

Under the Act on Reporting and Using Specified Financial Transaction Information, operating a virtual asset business without registration can result in up to five years in prison or a fine of up to 50 million won ($37,400). Foreign operators that serve domestic users are subject to the same regulations. Registered virtual asset operators are also required to cut ties with unregistered firms.

Unregistered operators fall outside regulatory supervision, raising serious concerns about their potential misuse for money laundering. Inadequate security and user-protection measures also mean that victims of hacking or investment fraud have little recourse for recovering losses.

A joint investigation DAXA conducted with registered operators in June found that unregistered firms charged average transaction fees of 1.5 to 10 percent — up to roughly 62 times the 0.16 percent average fee at the five major won-denominated exchanges in South Korea.

KoFIU said it plans to continue working with DAXA, the Korea Communications Standards Commission and other relevant agencies to step up detection of unregistered operators. It will also pursue swift review requests for newly identified firms and alternative sites, and expand public disclosure of illegal operator lists already shared with registered businesses and investigative authorities.

"Users should verify whether an operator is registered before conducting any transactions, and take extra care to avoid losses from dealing with illegal virtual asset service providers," a financial authority official said.


kyoung@heraldcorp.com