South Korea’s top crypto exchange UpBit was hit with a business suspension over alleged violations of anti-money laundering (AML) regulation.
South Korea’s Financial Intelligence Unit (FIU) ordered UpBit to suspend operations over its failure to meet know-your-client (KYC) requirements, according to a recent report by local news outlet Maeil Business Newspaper.
The news comes as South Korea recently started discussions concerning the development of the second part of its crypto regulatory framework. Earlier this month, the nation was also reported to be planning to lift its ban on cryptocurrency trading by local institutional investors.
The details
The order of suspension was notified to the exchange on Jan. 9, allowing until next Monday for the firm to respond. A final decision concerning the penalty is expected to be made by FIU the day after the time’s up.
If the order is confirmed, UpBit may be restricted from onboarding new customers for up to six months. The suspension follows an on-site inspection by FIU agents after the exchange requested a license renewal in August 2024.
According to the report, the inspection revealed about 700,000 potential instances of KYC requirements violations. Under South Korea’s Act of Reporting and Use of Specific Financial Information, UpBit could be fined up to 100 million Korean won (approximately $68,680) for each violation, for a maximum fine of nearly $48.1 billion.
In addition to potential KYC infractions, the FIU also raised concerns about the exchange offering its services to overseas traders. This conflicts with local regulations that restrict South Korean exchanges to serving only verified South Korean citizens.
UpBit’s business license expired in October last year, and the process of renewal triggered the ongoing investigations into the company. The firm alone holds a stronghold over South Korea’s crypto market, responsible for roughly 70% of the domestic volume.
According to CoinMarketCap data, over the 24 hours to press time UpBit was the fifth top crypto exchange by volume with over $8.3 billion worth of trades taking place.