The South Korean Fair Trade Commission (FTC) is reportedly investigating 13 major cryptocurrency exchanges in the country for violations of consumer laws, such as electronic commerce laws and contract laws. The investigations came after the bankruptcy announcement by cryptocurrency exchange Youbit after a major hack.
The FTC said it will look into whether they should remain under the online retail business category, or fall under different category to enforce stronger measures. It will also check whether there is any unfairness among the terms and conditions used by the business operators and take action in accordance with relevant laws and regulations.
The investigations is a follow-up on the government’s wide-ranging measures to curb cryptocurrency speculation and crimes. According to the government, previous inspections on crypto exchanges revealed that most of the companies (10 companies) demonstrated administrative and technical security procedures such as the installation and operation of access control devices and encryption measures of personal information. Overall, the measures were found to be inadequate.
Last week, the Ministry of Science and Technology announced that Bithumb, Korbit, Coinone, and Upbit, which are among the 13 being investigated, are required to receive 2018 Information Security Management System (ISMS) certification, a system that certifies that the information protection system of companies with annual revenue of more than 10 billion won and average daily visitor of over 1 million is appropriate. They have also been urged to strengthen the security of their exchanges.
Small and medium-sized crypto exchanges that are not required to meet this standard will be subject to the Personal Information Management System, an “autonomous certification system that assesses the comprehensive management system of collecting, using and destroying personal information of companies.” For these exchanges, the Korea Communications Commission (KCC) will be responsible, strengthening the protection of personal information. The Commission will also strictly enforce punitive fines and penalties for exchanges that violate related laws.
The government also warned that cryptocurrency is not a “legal tender whose value is guaranteed by the central bank” and therefore its prices could fluctuate by a great deal and result in enormous losses.
