- Upbit could face a six-month suspension over KYC violations.
- FIU warns Upbit after discovering 700,000 KYC-related breaches.
- Upbit’s business license renewal was delayed due to KYC issues.
South Korea’s largest cryptocurrency exchange, Upbit, is under scrutiny by the Financial Intelligence Unit (FIU) for failing to meet critical KYC regulations. With over 700,000 violations, the company could face serious penalties, including a business suspension.
Upbit Faces Suspension
South Korea’s Financial Intelligence Unit (FIU) has notified the exchange of a possible suspension penalty for failing to meet Know Your Customer (KYC) requirements. The crypto exchange is facing scrutiny for over 700,000 alleged violations in its customer identification process. The penalty could restrict the exchange from accepting new users for up to six months.
On January 9, the FIU issued a formal warning to Upbit, stating the potential for a business suspension. The exchange has until January 20 to submit its response to the FIU’s findings. A final decision on the suspension is set to be made on January 21.
FIU’s Investigation and Reasons for Upbit’s Potential Suspension
Upbit, South Korea’s largest cryptocurrency exchange, faces major consequences because of its KYC violations. The regulator discovered the breaches during a review of the exchange’s business license renewal application. As a result, the exchange could face fines up to 100 million Korean won ($68,596) per violation.
FIU’s investigation found that the exchange’s transactions with overseas traders violate local regulations. South Korea’s law prohibits exchanges from serving foreign customers unless they are verified South Korean nationals. The exchange’s handling of international clients has raised further issues, as regulations clearly restrict its operations to domestic users.
Upbit’s business license expired in October 2024 and its renewal application is still under review. The FIU’s investigation began after the exchange filed its license renewal request. The regulator has also indicated that the exchange’s operations with foreign crypto firms may further violate local law.
Upbit, which was founded in 2017, controls 70% of South Korean crypto market share. Globally, Upbit ranks as the third-largest centralized exchange in trading volume. According to The Block’s data, the exchange processed more than $283 billion in transactions in the last one month.
Impact of FIU’s potential suspension
The FIU’s scrutiny of the exchange is part of South Korea’s regulatory efforts to enforce strict anti-money laundering (AML) measures. The regulator has previously issued warnings to crypto exchanges that fail to comply with KYC and AML regulations. With more than 700,000 suspected KYC breaches, Upbit could face significant financial penalties.
The crypto community continues to monitor the progress of the investigation as the exchange responds to the FIU’s findings. Any suspension or penalties could affect the exchange’s operations and its customers. The financial regulator’s actions reflect growing concern over regulatory compliance within the country’s cryptocurrency sector.
The exchange maintains that it had no intention to violate the law, despite the ongoing investigation. The exchange has stated that identifying foreign exchanges in advance has been a challenge. However, the company must now address the violations and cooperate with South Korean authorities to avoid further legal consequences.