You Won’t Believe What’s Happening to South Korea’s Largest Crypto Exchange

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In response to serious regulatory concerns, South Korea’s leading oversight authority is preparing to temporarily halt operations for the nation’s biggest cryptocurrency exchange, Upbit. This action follows accusations that the platform did not adhere to anti-money laundering regulations and neglected its Know Your Customer (KYC) requirements.

According to recent reports from this past Thursday, individuals who are knowledgeable about the situation have shared that the Financial Intelligence Unit (FIU), part of the Financial Services Commission, delivered a notice to Upbit a week ago.

Should the regulatory body impose sanctions, Upbit will temporarily halt onboarding new clients for approximately half a year. Nevertheless, current users would still be allowed to transact on the platform during this pause. With about 70% of the domestic cryptocurrency trading market under its control, this suspension could have a substantial influence on Upbit’s overall operations.

By January 20, the cryptocurrency exchange must provide a reply to the Financial Intelligence Unit (FIU). Following this response, the regulatory body will scrutinize the exchange’s justification at a hearing scheduled for January 21. After careful examination, they will then make a conclusive decision regarding the potential suspension, which will be finalized afterward.

Upbit Faces Severe Sanctions Over KYC Violations

The imposition of sanctions on Upbit signifies a trend towards more stringent regulation in South Korea’s cryptocurrency sector. This action has sparked worries among players in the virtual asset industry, as they ponder over its potential influence on Upbit’s forthcoming business license renewal assessment.

In October 2024, Upbit had its license renewed. However, this renewal is currently being examined by financial authorities who are investigating Upbit’s compliance after conducting on-site inspections. The Financial Intelligence Unit has uncovered approximately 700,000 instances of Know Your Customer (KYC) rule violations in their review.

Beyond the possibility of halting activities, the Financial Intelligence Unit (FIU) is exploring penalties amounting to as much as 100 million Korean won per offense. The regulatory body has additionally discovered that Upbit has been transacting with unregistered foreign virtual operators, making the situation more intricate.

A spokesperson for Upbit clarified that the company had no intention of breaking regulations. They pointed out the inherent complexity in identifying, beforehand, whether international exchanges might go unreported, given the decentralized and anonymous nature of blockchain transactions.

South Korea Fast Tracks Crypto Regulations

Currently, South Korea is making efforts to solidify its cryptocurrency regulatory structure, initiating formal dialogues aimed at expediting the process. Consequently, regulatory bodies strive to present a preliminary draft by mid-2025.

As a researcher, I’ve just learned that our nation’s Financial Services Commission (FSC) recently convened a meeting regarding the forthcoming cryptocurrency legislation. The FSC has identified crucial focus areas for this bill.

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2025-01-16 17:26