South Korea launches investigation on local crypto exchanges

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This year, most recently during the FTX meltdown, native crypto assets have been the primary cause of the downfall of multiple exchanges and ecosystems. The Korea Financial Intelligence Unit (KoFIU), the country's financial watchdog, took note of this and opened an inquiry into crypto exchanges about the listing of their own internal and self-issued coins.

Due to the decline in the value of its proprietary token the FTT or the FTX Token, crypto exchange FTX and its 130 connected companies recently filed for bankruptcy. KoFIU is now looking into Korean crypto exchanges (even though it is illegal for them to issue native tokens) in order to assure regulatory compliance for investor protection.

According to local media outlet Yonhap, Flata Exchange is one of the main suspects and is under investigation for listing its own coin, FLAT, back in January 2020. Authorities have cleared major exchanges like Upbit and Bithumb, therefore the investigations will be more concentrated on smaller exchanges.

Initial checks showed that all crypto exchanges in South Korea were operating legally. A Financial Services Commission (FSC) representative, however, stated that a more thorough inquiry is anticipated because "there are still some doubts relating" to the internal token listings.

There are around 6,000 Korean investors in FTT, and their holdings number 110,000 units, according to estimations made by the local press. Korean internet users, who are ranked second after Japanese users in terms of importance, contributed 6 percent of FTX's internet traffic in the month of October, according to Similarweb.