South Korea pushes new rules to block crypto scam, laundering offramp

South Korean authorities have implemented a standard rule for all exchanges that restricts users from easily bypassing withdrawal delays, especially in cases where they are linked to fraud. 

A loss of 170.5 billion won was recorded between June and September of 2025 due to criminals exploiting the differing exception requirements of various exchange platforms. 

South Korean exchanges can no longer make their own rules 

South Korea’s Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) announced on April 8 that they are implementing an “enhanced virtual asset withdrawal delay system.”

The previous withdrawal delay system, which was designed to hold new users’ funds for 24-72 hours, allowed for “exceptions.” However, each exchange had different standards for granting these exceptions. 

Some exchanges allowed users to skip the delay if they simply met a minimum number of transaction days or deposit/withdrawal counts, allowing fraudsters to move stolen funds off platforms within minutes after manipulating their trading history to match the exchange’s specific criteria. 

The process often took less than an hour, making it impossible for banks or police to freeze the assets.

According to official data, between June and September of last year, 59% of fraudulent activities (1,490 out of 2,526) occurred in accounts that were exempt from withdrawal delays. In terms of financial damage, 170.5 billion won, representing 75.5% of the total 225.7 billion won lost, was withdrawn without any friction through these exempted accounts.

Now, to qualify for an immediate withdrawal, a user must pass a strict evaluation that mandatorily includes factors such as transaction frequency, transaction period, and deposit/withdrawal amounts. 

Specific “non-exception” requirements have also been codified to prevent loopholes.

Which users will be able to withdraw crypto quickly?

The FSC has stated they will “minimize consumer inconvenience by allowing withdrawal delay exceptions if immediate withdrawal is required for reasons unrelated to voice phishing, such as liquidation.”

Simulations run by the authorities applying the new standard show that the number of customers who will get access to withdrawal delay exceptions is expected to be “significantly reduced to less than 1% of existing customers.” 

Furthermore, for the tiny fraction of users who do qualify for an exception, follow-up management will be extremely strict. Exchanges are now required to conduct enhanced customer verification (KYC) procedures on these accounts at least once a year, including checking the source of funds. 

A separate intensive monitoring system is also being established to collect and analyze data on virtual asset withdrawals and detect abnormal transactions. 

South Korean authorities have been tightening legislation for the crypto industry. Cryptopolitan recently reported that the FSC mandated that all five major virtual asset exchanges compare their ledgers and wallet balances every 5 minutes. This measure was prompted by the recent Bithumb Bitcoin overpayment incident. 

The FSC has vowed to continue monitoring the effects of the new system, stating that it will “regularly reconsider the adequacy of the standards to prevent new bypass methods from occurring.”