Upbit has been hit with severe punishment from South Korea’s Financial Services Authority (FSA) for not complying with the set regulations undertaking its anti-money laundering guidelines, specifically the Know Your Customer (KYC) process.
According to local reports, the sanctions were placed by FIU of the Financial Services Commission on the 9th of January of 2025. Further communication by the authority’s department is expected on the 16th of January.
Because of this, the exchange will no longer be able to onboard new customers for a temporary period while also being restricted in providing the ability to transfer virtual assets out of the exchange for a period of up to three months.
However, existing customers still have the choice to trade on the exchange if they want. Moreover, Upbit controls more than 70% of the trading market in Korea.
The exchange now has until the 20th of December to address FIU’s findings. A hearing to finalize the sanctions will be held on December 21.
The people tasked with inspecting Upbit found out that there were up to seven hundred cases where the exchange failed to conduct KYC appropriately. KYC is important in averting money laundering and financing terrorism by verifying people’s identities after gaining adequate background information.
It was also revealed that Upbit has engaged with an unreported foreign cryptocurrency service provider which is a crime under the Special Restriction Law.
An Upbit representative defended their position by explaining that “It was difficult to identify whether it was an overseas undeclared exchange in advance on the blockchain,” and stated that the issue was unintentional.
This penalty follows the implementation of the Virtual Asset User Protection Act in July 2024, which aims to tighten regulations in the virtual asset market. The FSA’s decision signals its strong push to improve the industry’s legal framework. The exchange’s business license renewal is also under review, with the FIU having inspected the application process since August 2024.
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