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South Korea’s largest cryptocurrency exchange, Upbit, is under intense regulatory scrutiny. After being accused of violating over 700,000 Know Your Customer (KYC) and Anti-Money Laundering (AML) obligations, Upbit is facing suspension.
According to local media reports published on 16 January 2025, the Financial Intelligence Unit (FIU), a division of South Korea’s Financial Services Commission (FSC), has issued a suspension notice to Upbit.
The authorities are proposing a six-month ban on registering new users.
Explore: South Korea Doesn’t Want To Be Vague About Crypto Anymore! Stock Exchange Chief Calls For Institutionalization
The Allegations: A Massive Compliance Breach
Financial Authorities Impose Business Suspension on Upbit
1/ Breaking: South Korea’s Financial Intelligence Unit (FIU) has issued a preliminary suspension order against Upbit—Korea’s largest crypto exchange—over alleged KYC/AML non-compliance. If confirmed on Jan 21, Upbit…
— BLOCKMEDIA(블록미디어) (@with_blockmedia) January 16, 2025
The FIU alleges that Upbit failed to properly verify the identities of between 500,000 and 700,000 accounts, a critical requirement under South Korea’s Special Financial Transactions Act.
This law mandates strict KYC compliance to prevent money laundering and other financial crimes.
Each violation could result in fines of up to 100 million Korean won (approximately $68,600), potentially exposing Upbit to penalties totaling $34.3 billion—a staggering amount that underscores the severity of the allegations.
Additionally, regulators claim that Upbit conducted transactions with unregistered foreign cryptocurrency service providers, further compounding its legal troubles.
Upbit has until 20 January 2025 to respond to the FIU’s allegations before a final decision is made on 21 January. The exchange is expected to present its case vigorously, given the high stakes involved.
In July 2024, the Virtual Asset User Protection Act was implemented, introducing stricter compliance requirements for crypto exchanges. These include enhanced KYC/AML measures, user deposit protections, and mandatory reporting of suspicious transactions.
Related: South Korea Delays 20% Crypto Tax For Third Time, Cites Regulatory Refinement
South Korea’s FSC Opens Door For Corporate Investments In Crypto Assets
Recently, South Korea’s FSC announced its intention to allow corporate investments in digital assets.
FSC Secretary-General Kwon Dae-young announced the move in a 2025 briefing. He said, “We need to discuss how to create listing standards, what to do with stablecoins, and how to create rules of conduct for virtual asset exchanges.”
He further added, “We will work to align with global regulations in the virtual asset market.”
The proposed changes extend beyond crypto investments. Current regulations allow companies to hold up to 5% of stocks in non-subsidiary entities. The FSC plans to increase this limit to 15%, enabling corporations to exert greater operational control. Additionally, there are plans to relax consignment business regulations and enhance data-sharing mechanisms within financial holding groups.
The new framework also seeks to create rules of conduct for virtual asset exchanges, ensuring a fair and transparent trading ecosystem.
Related: South Korea’s FSC Opens Door For Corporate Investments In Crypto Assets
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