South Korea Blocks 27 Crypto Exchange Websites in Regulatory Crackdown

South Korea has intensified its cryptocurrency regulatory crackdown by ordering access restrictions on 27 unregistered crypto exchange websites, including KuCoin, MEXC, Phemex, BingX, and BitMart.

The Financial Intelligence Unit (FIU) announced the decision on October 13, following approvals from the country's communications review authority on October 6 and 7. Under the directive, overseas-hosted platforms will face website access restrictions, while services operating through domestic servers or operators may be terminated.

The latest enforcement measures build on previous efforts to prevent unauthorized cryptocurrency exchanges from serving South Korean investors. In March 2025, Google Play restricted 17 unregistered trading platforms, including KuCoin and MEXC, following regulatory requests.

Authorities will now pursue website restrictions whenever unregistered operations are identified, without waiting for court decisions or confirmed investor losses.

South Korean regulations require cryptocurrency exchanges targeting domestic customers to register with financial authorities. Platforms offering Korean-language services, advertising to local investors, or supporting Korean won transactions may fall under these requirements.

Violations can result in prison sentences of up to five years or fines reaching 50 million won. The FIU has already referred 44 unregistered operators for investigation.

Meanwhile, regulators have warned investors to withdraw their cryptocurrency holdings from affected exchanges immediately, acknowledging that website restrictions could complicate access to funds.

The Digital Asset eXchange Alliance (DAXA) is expected to assist users navigating potential withdrawal difficulties.

KuCoin responded by emphasizing its commitment to regulatory compliance and maintaining that customer assets remain secure.

Beyond compliance concerns, authorities highlighted excessive trading fees on unauthorized platforms. A June investigation found that flagged exchanges charged fees ranging from 1.5% to 10%, compared with an average of 0.16% across South Korea's five major won-based exchanges.

According to Tiger Research, South Korean investors paid approximately $3.5 billion in fees to foreign cryptocurrency exchanges in 2025.

The research firm also estimated that roughly 700 trillion won moved from Korean exchanges to overseas platforms between 2021 and 2026, including projected transactions.

South Korea's domestic cryptocurrency market has also weakened, with exchange-held crypto assets declining 33% to 58.9 trillion won during the first half of 2026.

The crackdown could encourage investors to return to regulated domestic exchanges or shift toward decentralized trading platforms, potentially reshaping cryptocurrency trading activity across South Korea.