South Korea warns users after reporting 40 unregistered crypto operators

South Korea’s Financial Intelligence Unit has referred about 40 unregistered virtual asset service providers to investigative authorities and warned consumers about the risks linked to unauthorized crypto businesses.

The Financial Intelligence Unit, which operates under the Financial Services Commission, said Tuesday that dozens of unregistered operators have been reported to law enforcement. 

According to the regulator, any company seeking to provide virtual asset services in South Korea must register with the FIU and meet requirements such as Information Security Management System certification under the country’s Special Financial Transactions Act.

Foreign companies that offer services to South Korean residents must comply with the same registration rules, the FIU said.

Authorities stated that unregistered operators fall outside the scope of South Korea’s Virtual Asset User Protection Act and the Special Financial Transactions Act. The agency warned that users of such platforms face greater exposure to personal data leaks and cyberattacks, while the services themselves could be exploited to conceal criminal proceeds or facilitate money laundering.

The FIU also cautioned that customers may struggle to recover losses if an operator accepts payment but fails to deliver virtual assets. The agency added that some users have faced excessive fees that were not properly disclosed in advance.

FIU identifies common methods used by illegal operators

The FIU said investigators have identified cases in which overseas crypto businesses effectively targeted South Korean users while attempting to conceal domestic operations. Authorities cited examples where firms organized customer recruitment campaigns through Telegram and KakaoTalk open chat rooms but conducted customer support in English to avoid drawing regulatory attention.

Regulators also reported instances in which private currency exchange businesses sold stablecoins and other digital assets directly to international students, tourists, foreign workers residing in South Korea, and individuals who preferred not to disclose their identities. Those services exchanged virtual assets for fiat currencies such as the Korean won.

The agency further warned consumers about promotional activity on social media platforms. Authorities said some individuals received fees from overseas virtual asset service providers in exchange for advertising those businesses through YouTube channels, Telegram groups, and online chat rooms.

Consumers who suspect illegal virtual asset activities can submit reports to the FIU, the Digital Asset eXchange Alliance (DAXA), or law enforcement agencies, the regulator said. Individuals may also file complaints directly with investigative authorities.

A financial authority official said agencies would continue coordinated enforcement efforts against illegal virtual asset activities. The official added that regulators plan to maintain continuous monitoring through public tip-offs and expand joint investigations with related institutions.

The warning comes as South Korea prepares to introduce a regulated framework for cross-border virtual asset transfers in December. Amendments to the Foreign Exchange Transactions Act will require companies that provide international digital asset transfer services to register with the Ministry of Economy and Finance and report transactions through the Bank of Korea’s foreign exchange monitoring system.

Interest in blockchain-based payments and remittances has grown in the country. SBS Biz reported this week that overseas remittances processed through South Korea’s five largest won-denominated cryptocurrency exchanges climbed from 34.02 trillion won in 2022 to 163.55 trillion won in 2025.

Financial institutions have also increased activity in the sector, with Toss Bank recently signing an agreement with the Solana Foundation to examine stablecoin-based remittance and settlement services.

Separately, the Financial Services Commission announced plans last week to expand its regulatory sandbox framework to cover digital asset-related legislation, including the Virtual Asset User Protection Act, as authorities consider new pathways for blockchain and fintech services to operate under regulatory supervision.