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Allegations Reported by Digital Asset Exchange Alliance (DAXA)
South Korea's top five cryptocurrency exchanges, united under the Digital Asset Exchange Alliance (DAXA), have taken the unprecedented step of reporting global crypto trading platform OKX to local authorities. The report alleges that OKX has been operating within South Korea without proper registration, according to The Block.
While OKX hasn't explicitly targeted South Korean investors, DAXA's report claims the exchange promoted its Jumpstart program to local crypto users through Telegram influencers. According to industry sources cited by news agency News1, OKX allegedly paid Telegram communities to endorse Jumpstart.
A regulatory supervisor under the FSC called the Financial Intelligence Unit is expected to proceed with an investigation against OKX following DAXA's report, according to News1.
Regulatory Landscape and South Korea's Crypto Laws
South Korea mandates that every cryptocurrency exchange must register with regulators before providing trading services to its citizens. This regulation effectively prohibits foreign exchanges from legally serving South Korean investors. However, it doesn't prevent South Korean users from accessing foreign exchanges.
The primary concern of South Korean regulators revolves around whether foreign crypto platforms actively target local traders through marketing, offering trading in Korean won, or providing services in the Korean language.
Stringent Punishments for Crypto Criminals
South Korea's Financial Services Commission (FSC) recently announced stringent punishments for crypto criminals under the country's new crypto law, effective July 19. Violations of the law could result in at least one year of imprisonment or fines ranging from three to five times the amount of illegal gains.
Individuals earning over 5 billion Korean won ($3.76 million) from such violations could face life imprisonment or a penalty double the proceeds.
The legislation, known as the "Virtual Asset User Protection Act," aims to eliminate illicit market activities, including the use of undisclosed information for crypto investments and market manipulation.
OKX's Strategic Partnership Amidst Scrutiny
Despite regulatory scrutiny, OKX, a global leader in Web3 technology and virtual assets, announced plans to expand its strategic partnership with SignalPlus, a leading virtual asset trading infrastructure provider. The partnership aims to integrate SignalPlus' comprehensive trading tools into OKX's platform, enhancing users' trading experience.