Upbit’s Cryptic Tango with South Korean Regulators: A Tale of Suspensions and Sanctions

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Ah, the sweet scent of suspense wafts through the air as Upbit, the South Korean cryptocurrency exchange, finds itself in a rather precarious predicament. The Financial Intelligence Unit (FIU) has bestowed upon Upbit a partial business suspension, leaving new customers temporarily restricted from depositing or withdrawing funds. This delightful restriction shall last for three months, but fear not, existing users shall remain unaffected.

The reason for this delightful dance with the regulators? Why, Upbit has been found guilty of violating South Korean laws that prohibit exchanges from processing transactions involving unregistered crypto asset service providers (CASPs).

Upbit’s Apology Tour: A Symphony of Sanctions and Regulatory Measures

Upbit, ever the gracious host, has released a statement apologizing to its users for the restrictions. It explained that the sanction, which prevents new customers from transferring crypto assets, was enacted following a 2024 inspection by the FIU. Upbit added that it has made the necessary changes requested by regulators.

Upbit clarified that while existing users can trade as usual, new users are restricted only from depositing and withdrawing crypto. However, they can still trade, exchange assets, and handle KRW transactions without limits. The exchange noted that certain details were not fully considered in the decision and that it will clarify them through the proper regulatory procedures.

The firm also stated that the restriction could change based on regulatory processes, potentially allowing new users full access if the measures are lifted. It explained:

“In the meantime, we would like to inform you that the sanctions imposed this time may be changed through procedures in accordance with relevant regulations, and if the effect of the said measures is suspended or terminated, new members will also be able to use Upbit’s services without restrictions.”

Upbit acknowledged the regulators’ aim to strengthen anti-money laundering measures and compliance. It further emphasized that it will work on improving its internal control system.

CEO of Dunamu and Executives Face Disciplinary Action: A Tragicomedy of Errors

The sanction has also impacted Lee Sirgoo, CEO of Dunamu, Upbit’s parent company, who received a reprimand, while compliance officers were notified of potential dismissal. In total, nine executives and employees face disciplinary action. No fines have been issued yet, and the FIU will decide after further discussions.

The restriction on new user transactions will be in effect from March 7 to June 6. According to a local news report, an FIU official stated that due to the strict penalties for violating financial reporting laws, virtual asset businesses must fully comply with regulations and strengthen their anti-money laundering measures.

“Given the strict sanctions imposed for violations of the Act on Reporting and Using Specified Financial Transaction Information, virtual asset businesses must ensure full compliance with their obligations under the law,” the official said.

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2025-02-25 13:56