The Third Largest Crypto Exchange Faces Criminal Investigation

OKX, the world’s third-largest cryptocurrency futures exchange by trading volume, has come under the scrutiny of South Korea’s financial watchdogs. 

The Financial Intelligence Unit (FIU) has initiated a criminal investigation into the exchange’s operations in South Korea following allegations of unlawful activities. This development highlights regulatory bodies’ tightening grip on virtual asset service providers (VASPs) operating without due compliance.

OKX Under Investigation in South Korea

Recent investigations have unearthed that OKX may have sidestepped regulations by engaging in unreported operations within South Korea. The Digital Asset Exchange Association (DAXA) reported these findings to the FIU, prompting an in-depth examination of the matter. 

The investigation focuses on OKX’s promotional tactics. Reportedly, they involved leveraging domestic influencers to attract Korean users, a strategy that has raised significant legal and ethical questions.

The issue started with the OKX website’s lack of Korean language support. This is essential for foreign exchanges in Korea. Financial authorities have also targeted other foreign exchanges for similar issues. They stress the need for clear and lawful dealings with Korean customers.

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The problem began when the OKX website did not provide support in Korean, a critical feature for international exchanges operating in Korea. Financial regulators have similarly scrutinized other foreign platforms for comparable shortcomings, emphasizing the importance of transparent and legal interactions with Korean clients.

Crypto exchanges must comply with South Korea’s laws to cater to over 9.73 million crypto users in the country. As per estimates, the number of users will increase to $12.02 million by 2028

Despite this, OKX’s approach, particularly its use of the Telegram platform for promotion, suggests a calculated attempt to navigate these regulations. Experts argue that OKX’s promotional activities directly contravene the Specific Financial Information Act, particularly targeting the Korean market through social media influencers. 

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“I understand that OKX promoted Jumpstart to the Telegram community for a fee. It became a problem because it was a type of sales targeting Korean,” an official in the domestic crypto industry said.

The FIU’s investigation into OKX is a significant moment in the ongoing effort to ensure compliance and protect investors within the cryptocurrency sector.