Crypto Storm Brewing: OKX Faces Probe in South Korea for Alleged Violations

OKX, a major player in the global crypto trading market, is facing scrutiny in South Korea. The Digital Asset Exchange Alliance (DAXA), which includes South Korea’s leading five crypto exchanges, has filed a complaint with local regulatory bodies, alleging that OKX has engaged in activities within South Korea without legal registration.

OKX Under Scrutiny

Reports indicate that OKX is accused of indirectly targeting South Korean investors for its “Jumpstart program” through Telegram influencers. This allegation arises despite OKX not directly offering services to South Korean investors. The case centers around OKX’s promotion method, which reportedly involved compensating Telegram communities for marketing the Jumpstart program.

South Korea’s Regulatory Environment

In South Korea, foreign exchanges must register before offering services to its citizens. This rule effectively limits foreign exchanges from legally serving South Korean investors. Following the report by the Digital Asset Exchange Alliance (DAXA), the Financial Intelligence Unit (FIU), operating under the Financial Services Commission (FSC), is expected to commence a probe into OKX’s activities. This expected investigation aligns with South Korea’s plan to implement more rigorous regulatory measures within the cryptocurrency market.

South Korea’s Stance on Crypto Regulations

South Korea is preparing to introduce stricter crypto laws, which could result in severe penalties, including life imprisonment, for crypto offenders. Breaches of the upcoming cryptocurrency legislation, which will be in effect from July 19, might lead to penalties including at least one year of incarceration or monetary fines amounting to five times the illicit profits gained.

Potential Shift in South Korea’s Crypto Stance

South Korea’s approach toward cryptocurrencies has been cautious, with digital currencies not classified as financial assets and financial institutions barred from engaging in cryptocurrency investments since 2017. However, there are signs of a potential shift in South Korea’s crypto stance. The country’s Financial Supervisory Service (FSS) has recently expressed interest in seeking guidance on Bitcoin Spot Exchange-Traded Funds (ETFs) from the US Securities and Exchange Commission (SEC).

The FSS governor plans to meet with the SEC chairman to discuss various financial market aspects, including digital assets and Bitcoin spot ETFs. This meeting follows the SEC’s recent approval of several Spot Bitcoin ETF applications in the United States, marking a significant regulatory milestone.