South Korea’s Financial Services Commission (FSC) has issued a suspension notice to Upbit, one of the country’s leading cryptocurrency exchanges, for alleged violations of Know Your Customer (KYC) protocols. The Financial Intelligence Unit (FIU), an arm of the FSC, announced potential punitive measures on January 16, 2025, as reported by Naver.
Potential Suspension on New User Registrations
The FIU proposes halting new user registrations on the Upbit platform for six months. However, the suspension would not affect current users. Upbit has until January 20 to respond to the notice before authorities make their final decision on January 21.
This move follows allegations that surfaced in November 2024, where the FIU uncovered between 500,000 to 600,000 breaches in Upbit’s client identification procedures during a routine review of its business license renewal.
Heavy Penalties for Non-Compliance
South Korea’s Special Financial Transactions Act imposes fines of up to 100 million Korean won (approximately $68,600) for each KYC violation. If Upbit’s reported breaches are confirmed, the company could face penalties totaling a staggering $34.3 billion.
Additionally, the Special Act prohibits South Korean crypto firms from transacting with unregistered cryptocurrency service providers. According to Naver, Upbit is alleged to have violated this provision by engaging in business with unregistered operators.
Upbit’s Market Presence
Launched in 2017, Upbit has grown to become one of South Korea’s and the world’s largest crypto exchanges, handling an estimated $7.5 billion in daily trading volume, according to CoinGecko.
This news arrives amidst broader regulatory scrutiny in South Korea. On January 16, Lee Jung-hoon, former chairman of the major crypto exchange Bithumb, was acquitted in an appeal trial concerning a 2017 data breach that compromised 31,000 user accounts.
Upbit has yet to release a statement on the suspension notice, and the FSC has also not provided further comments as of this publication.
