OKX faces potential probe in South Korea after alleged rule-breaking
Quick Take
- A local council of crypto exchanges alleged that OKX promoted its Jumpstart program to South Korean investors without proper registration.
Digital Asset Exchange Alliance, a working group consisting of South Korea’s top five cryptocurrency exchanges, told The Block Wednesday that it has reported global crypto trading platform OKX to the local authorities for allegedly operating locally without proper registration.
While OKX did not explicitly offer services to South Korean investors, DAXA reported the exchange to local authorities for allegedly promoting its Jumpstart program to local crypto users via Telegram influencers, news agency News1 reported Wednesday, citing an industry source familiar with the matter. The source told the local news outlet that OKX paid Telegram communities to promote Jumpstart.
Meanwhile, a spokesperson for DAXA told The Block that it does not hold authority to give verdict on OKX's alleged violation. "The decision is for the Financial Intelligence Unit to make," the spokesperson said.
The Block has reached out to OKX for further comment.
South Korea requires every cryptocurrency exchange to register with regulators before offering trading services to its citizens, which has effectively barred all foreign exchanges from legally serving South Korean investors. In 2021, the Financial Services Commission notified 27 foreign exchanges to register locally or withdraw Korean language services from their platforms.
However, such a mandate does not prohibit South Korean users from accessing foreign exchanges. The primary concern of South Korean regulators is whether foreign crypto platforms target local traders via marketing, offering trading in Korean won or providing Korean language services.
The Financial Intelligence Unit, a regulatory supervisor under the FSC, is expected to launch an investigation into OKX following DAXA’s report, according to News1.
DAXA was formed in 2022 following the collapse of the Terra-Luna crypto project to take joint action on various events that may impact the local crypto ecosystem. Its members — Upbit, Bithumb, Korbit, Coinone and Gopax — account for over 99% of the local crypto trade volume.
Updates made for additional quote from DAXA spokesperson.
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