Uber, which raised $1.2 billion earlier this month at a valuation of $40 billion, said in August it had sought a legal opinion and that its Seoul service obeys the law. Opposition to its operations is down to outdated regulations that precede smartphone and wireless technology, Allen Penn, the company’s head of Asia, told reporters at the time.

Paid transportation with unregistered vehicles is “clearly illegal activity,” South Korea’s Ministry of Land, Infrastructure and Transport said later that month.

The maximum penalty for Uber’s alleged legal violation is a two-year prison sentence or a fine of as much as 20 million won, Yonhap reported today.

Uber, which according to its website operates in 53 countries, started its service in Seoul in 2013. It competes with local taxi-hailing apps such as NaviCall, run by a unit of the nation’s largest mobile phone carrier SK Telecom Co., which connects users with registered taxis.

Seoul’s government has said it will launch its own smartphone-based cab-hailing service using taxi operators.

Last week, Uber’s services were declared illegal in Taiwan. In addition to worries over the safety of consumers following reports of rape in New Delhi and Boston, Taiwan officials are concerned about how Uber collects and manages personal data including name, credit card, location and route, the Minister of Transportation and Communications Yeh Kuang-shih said in an interview. (Bloomberg)