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"Even if servers are overseas, domestic operations must comply with the Act on Reporting and Using Specified Financial Transaction Information"
The Digital Asset eXchange Alliance (DAXA) announced on the 1st that it had identified four overseas virtual asset exchanges that had been operating targeting domestic users without registration and requested a police investigation the previous day.
This request for investigation was made to respond to the illegal domestic business activities of unregistered overseas exchanges that failed to fulfill their obligation to report as Virtual Asset Service Providers (VASPs) to the Financial Intelligence Unit (FIU) in accordance with the Act on Reporting and Using Specified Financial Transaction Information (Special Financial Information Act).
DAXA investigated the websites and mobile apps of the target exchanges and confirmed illegal activities such as ▲ official Korean language service support ▲ display of transaction prices converted to Korean Won (KRW) ▲ active customer recruitment activities through benefit provision.
Unregistered exchanges, which are not subject to the management and supervision of domestic financial authorities, have weak anti-money laundering (AML) and user protection systems, making it difficult to recover damages even if incidents such as withdrawal suspensions or hacking occur, thus requiring caution.
Kim Jae-jin, Executive Vice Chairman of DAXA, emphasized, "If an exchange operates targeting domestic users, it is clearly subject to compliance with domestic Special Financial Information Act, even if its servers or headquarters are located overseas."
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