South Korea’s Financial Intelligence Unit (FIU) has issued a suspension notice to Upbit, one of the nation’s leading cryptocurrency exchanges, citing alleged violations of Know Your Customer (KYC) protocols. The FIU’s investigation reportedly uncovered between 500,000 to 600,000 instances where Upbit failed to adhere to KYC procedures, potentially exposing the platform to significant fines.
Under South Korean law, each KYC violation can result in a penalty of up to 100 million Korean won (approximately $68,600). Given the volume of alleged breaches, Upbit could face fines totaling up to $34.3 billion. Additionally, the FIU has accused Upbit of engaging in transactions with unregistered cryptocurrency service providers, further compounding its regulatory challenges.
The suspension notice proposes a six-month halt on new user registrations, though existing users would remain unaffected. Upbit has until January 20 to respond to the FIU’s findings, with a final decision on the suspension expected by January 21. This development comes shortly after Upbit’s business license renewal in October 2024, which is now under regulatory review.
Upbit’s situation mirrors broader regulatory scrutiny in South Korea’s cryptocurrency sector. Recently, Lee Jung-hoon, former chair of major exchange Bithumb, was acquitted in an appeal trial related to a significant 2017 data breach. These events underscore the increasing regulatory pressures faced by cryptocurrency exchanges in the country.
