Korean regulators extend the investigation of cryptocurrency exchanges.

The South Korean government is expanding its investigation into cryptocurrency exchanges, particularly the use of corporate accounts that regulators say can lead to money laundering. This announcement follows prosecutors who launched an investigation into the country's largest cryptography exchange, Upbit.

South Korea's main financial regulators are joining with prosecutors to expand their investigation of local cryptocurrency exchange operators. An official of the Financial Services Commission (FSC) was quoted by the Korea Times on Sunday:

"Following a request from the Financial Supervision Service (FSS) and the prosecution to address growing compliance concerns against money laundering and possible abuse of cryptocurrencies in money laundering and fraud, the FSC is seeking corporate accounts of the open exchanges in local banks ".

The use of corporate accounts for encryption transactions should have been discontinued when the government introduced the real-name system in late January. However, only 30% of all encrypted accounts have become real names so far.

The six banks that have the ability to issue real name accounts have chosen to attend only the largest encryption exchanges in the country: Upbit, Bithumb, Coinone and Korbit. However, not all the accounts in these exchanges have become real names. In addition, all small and medium exchanges continue to use corporate accounts for encrypted transactions.

Regulators say that the use of corporate accounts can lead to fraud, as recently seen with Coinnest whose CEO was accused of embezzlement. The largest exchange of Korean encryption by volume, Upbit, is also currently being investigated even though banks have been converting their accounts into real names.

South Korea has been discussing a collaboration with other countries on cryptocurrency regulations. In a recent Board of Directors of the International Organization of Securities Commissions (IOSCO) and the Annual General Assembly held in Hungary, the Vice President of the FSC, Kim Yong-beom, discussed cryptocurrency issues with the main national supervisory bodies. The meeting emphasized the need for IOSCO to cooperate with cryptocurrencies and ICO standards.

An FSC official was quoted by the Korea Times saying:

"The FSC is collaborating with authorities in other countries. Our latest findings show that the domestic exchange falsified its balance sheets and deceived investors. The FSC is verifying the Upbit computer system with the prosecutors and the FSS to audit the virtual currency holdings of the exchange. "

Meanwhile, the new FSS governor, Yoon Suk-heun, said recently that he will study the possibility of making regulations on domestic cryptocurrency more flexible, citing that "there are some positive aspects of cryptocurrencies."