SOUTH KOREA Law and Practice Contributed by: Wooyoung Choi, Suhhee Han, Seonghwan Ju and Matt Younghoon Mok, Lee & Ko
2.5 Market Abuse Article 10 of the Act on the Protection of Virtual Asset Users regulates unfair trading practices in virtual asset markets, which generally include the use of undis- closed material information, market manipulation, and fraudulent trading. These provisions are substantially similar to the prohibition on unfair trading practices under the FSCMA. In addition, unlike traditional securities markets, the Act imposes certain additional obligations specific to virtual asset markets, including a prohibition on trading self-issued virtual assets, a prohibition on unjustified suspension or restriction of deposits and withdrawals, and an obligation to monitor and detect Recently, the KoFIU has imposed severe administra- tive sanctions on virtual asset exchanges, including partial business suspension orders and substantial monetary penalties. These enforcement actions have been subject to legal challenges, with companies fil- ing administrative lawsuits seeking revocation of the sanctions, and related disputes are currently ongoing. Specifically, in 2025, KoFIU imposed a three-month partial business suspension order (prohibiting the transfer of virtual assets by new customers) and a fine of approximately KRW35.2 billion on Dunamu, the operator of the virtual asset exchange Upbit. The regulator found that Dunamu had violated several obli- gations, including the prohibition on transactions with unregistered VASPs, customer due diligence require- ments (such as improper use of identification docu- ment copies, failure to properly verify addresses, and failure to verify the authenticity of drivers’ licences), transaction restriction obligations, and suspicious transaction reporting obligations. Dunamu has filed an administrative lawsuit seeking cancellation of the suspension order, and it reportedly prevailed at first instance, with the case currently pending on appeal. In addition, an objection has been filed against the fine, and related proceedings are ongoing. Similarly, in March 2026, KoFIU imposed sanctions on Bithumb, including a fine of approximately KRW36.8 billion and a six-month partial business suspension abnormal transactions. 2.6 Non-Compliance
(prohibiting the transfer of virtual assets by new cus- tomers), based on comparable violations. In April 2026, Coinone was also sanctioned with a fine of approximately KRW5.2 billion and a three-month par- tial business suspension (also restricting transfers for new customers). Both Bithumb and Coinone have also initiated administrative litigation seeking revocation of these sanctions. Meanwhile, KoFIU has also taken enforcement meas- ures against unregistered foreign VASPs operating in Korea. These measures include: • notifying the public of such unregistered providers to discourage transactions with them; • reporting such providers to investigative authori- ties; and • pursuing measures to block domestic access to their websites and mobile applications. 3. Licensing and Set-Up Requirements 3.1 Licensing Requirements Korea operates a VASP registration regime, under which any person conducting the following activities as a business must register with the financial authori- ties: • buying and selling virtual assets; • exchanging virtual assets for other virtual assets; • transferring virtual assets, as specified by Presi- dential Decree; • custody or management of virtual assets; and • acting as an intermediary, broker, or agent for the above activities. In addition, under the Act on the Protection of Vir- tual Asset Users and the Act on Reporting and Using Specified Financial Transaction Information, the VASP registration requirements apply on an extraterritorial basis. Accordingly, even if the relevant activities are conducted outside Korea, they may still be subject to the registration obligation if they have an effect within Korea. In this regard, the financial authorities have taken the position that foreign VASPs may be deemed to have a sufficient domestic nexus – and therefore be subject to VASP registration – where they, for exam-
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