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South Korea Reportedly Expands Crackdown on Crypto Exchanges

Nikhilesh De

New reports suggest that the South Korean government is intensifying its moves against the country's bitcoin exchanges.

Reuters reported tonight that Bithumb and Coinone were raided by police and tax office officials on Wednesday and Thursday. Citing employees of the two exchanges, which are among the largest in South Korea, the news service said officials visited their offices amid an investigation into alleged tax evasion.

"Local police also have been investigating our company since last year, they think what we do is gambling," a Coinone employee told Reuters. The employee said that the exchange was cooperating with the investigation.

In an email to CoinDesk, a representative of Bithumb confirmed that they had met with Korean tax authorities.

"It is true that the National Tax Service visited Bithumb. However, we weren't raided by the police," the rep said.

Separately, South Korean news service SBS has reported that the South Korean Justice Department is planning legislation that would pave the way for exchanges in the country to be shut down entirely.

"The Ministry of Justice will set up its own bill, which sees the virtual money brokerage itself as illegal and completely closes the exchange, and plans to start full-fledged ministry discussions this week," the service reported, according to a translation.

According to a subsequent report from Reuters, the Justice Ministry said that a bill was forthcoming.

"There are great concerns regarding virtual currencies and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges," Park Sang-ki was quoted as saying.

The news represents a significant expansion in the growing scrutiny applied to the crypto-exchange space by South Korean regulators. Earlier this week, the Korean Financial Intelligence Unit and the Financial Supervisory Service announced that they were inspecting six unnamed banks for compliance with anti-money laundering and know-your-customer regulations.

The government had already declared in December that it would move to apply more scrutiny amid growing trade volume at the exchanges, including moves to curb anonymous trading.

Exchanges in South Korea have consistently seen prices well above those seen on other marketplaces. Indeed, it's a circumstance that earlier this week led to a controversial change by one popular data service to begin excluding some of the country's exchanges from its cryptocurrency price averages.

Image Credit: Pius Lee / Shutterstock.com

Editor's Note: Some of the quotes from this report have been translated from Korean. 

This article has been updated with additional information.

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