Upbit, South Korea”s leading cryptocurrency exchange, is facing a significant regulatory setback as the Financial Intelligence Unit (FIU) has imposed a fine of 35.2 billion won, approximately $25 million, due to violations related to anti-money laundering (AML) and know-your-customer (KYC) regulations. This penalty coincides with a suspension of new customer onboarding for a period of three months.
The FIU”s investigation uncovered over 5.3 million breaches of customer verification rules at Upbit, alongside the exchange”s failure to report suspicious transactions in 15 separate instances. A spokesperson for Dunamu, the operator of Upbit, has indicated that the company may appeal the FIU”s decision, citing past inaccuracies in FIU findings as a basis for their review.
In light of the sanctions, Dunamu has committed to enhancing its compliance systems to prevent future issues. The spokesperson remarked, “The FIU has made errors in the past,” referring to a prior case where a Seoul court overturned a fine against another exchange, Hanbitco, ruling that the violations did not contribute to money laundering.
The FIU”s action against Upbit is part of a wider initiative to enforce stricter AML measures across South Korea”s cryptocurrency exchanges. Other notable platforms, including Bithumb, Coinone, and Korbit, are also under scrutiny for similar compliance issues. Inspections have been ongoing since August 2024, with the FIU conducting thorough reviews of major exchanges in a “first-in, first-out” methodology.
Despite the regulatory challenges, Upbit has reported that its daily operations remain unaffected. The exchange continues to facilitate transactions while reinforcing its compliance protocols to ensure a secure trading environment for its users.
In addition to the sanctions against Upbit, the Financial Services Commission (FSC) has ordered exchanges to halt the onboarding of new crypto lending products, reflecting growing concerns regarding user safety in the rapidly evolving digital asset landscape. This suspension will remain until formal regulations for crypto lending are established, impacting major players in the South Korean market.
As regulatory oversight intensifies, Upbit asserts its dedication to adhering to all legal requirements, which underscores South Korea”s increasingly stringent stance on cryptocurrency exchange operations.
