South Korean authorities are aggressively escalating investigations into crypto-related platforms, driven by compliance breaches, illegal gambling probes, and internal operational failures. The regulatory scrutiny primarily targets domestic trading anomalies and the use of unregulated, decentralized platforms. [1, 2, 3, 4]
Polymarket Gambling Probe
South Korean police launched the country's first criminal investigation into local users of the Ethereum-based prediction market Polymarket. Led by the Gangwon Provincial Police Agency, investigators are examining whether citizens placing stablecoin wagers on local elections violated strict national gambling laws. [1, 2, 3]
Bithumb Operational Errors and Sanctions
Following a massive operational error where Bithumb accidentally distributed $44 billion in Bitcoin instead of small cash rewards, regulators launched a sweeping review of exchange internal controls. The Financial Services Commission (FSC) and Financial Supervisory Service (FSS) intensified investigations, leading to significant fines for compliance and KYC/AML (Know Your Customer/Anti-Money Laundering) failures. [1, 2, 3, 4, 5]
Unregistered Global Exchanges
South Korea’s Financial Intelligence Unit (FIU) previously sanctioned and blocked access to several unregistered international exchanges—including BitMEX, KuCoin, CoinW, Bitunix, and KCEX—for operating without proper local registration and AML frameworks. [1]
For a look into the massive Bithumb Bitcoin giveaway error that escalated into full-scale regulatory investigations:
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