By PAUL O’DONOGHUE, Senior Correspondent
SOUTH Korea’s Financial Intelligence Unit (FIU) has sanctioned Upbit, the country’s largest cryptocurrency exchange, for failing to comply with Know Your Customer (KYC) regulations.
As a result, Upbit faces a temporary ban from taking on new customers. New users will be unable to make crypto deposits or withdrawals from March 7 to June 6. However, existing customers can continue trading.
The FIU accused Upbit’s operator, Dunamu, of processing transactions for users with blurry or incomplete identification documents. Regulators identified 34,777 KYC violations and flagged 5,785 cases where users provided incorrect or missing address details.
In addition, authorities found that Upbit, along with global exchanges like MEXC and KuCoin, facilitated 44,948 virtual asset transfers with 19 unregistered foreign service providers. The FIU said this violated South Korea’s compliance laws under the Specific Financial Information Act, which requires exchanges to verify identities and report transactions accurately.
An FIU official said: “Virtual asset businesses must ensure full compliance with their obligations under the law”.
The FIU’s statement added that “the imposition of fines on Dunamu, not included in this action plan, will be finalized after future discussions at the FIU’s disciplinary committee,” indicating that Upbit may face further financial penalties.
Upbit challenges FIU’s ban
Despite the findings, Upbit has rejected the FIU’s verdict. The exchange claims it has already improved compliance and argues that the restrictions are too harsh. As a result, it plans to appeal the decision. In a statement published by Yonhap News, Upbit reassured users that new customers will regain access once the FIU lifts the sanctions.
This is not the first time Upbit has faced regulatory scrutiny. In November 2024, the Financial Services Commission (FSC) warned the exchange about KYC violations, cautioning that further non-compliance could lead to fines and restrictions. Analysts say that Upbit could face severe penalties for additional violations.
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