David Edwards
According to reports, Upbit, the biggest cryptocurrency exchange in South Korea, has been fined by the Financial Intelligence Unit (FIU) for allegedly breaking anti-money laundering (AML) laws, namely failing to comply with know-your-customer (KYC) standards. According to the Maeil corporate Newspaper, the punishment was revealed on January 9 and calls for Upbit to suspend specific corporate operations while additional investigation is conducted.
Highlighted Compliance Violations
The FIU, which works under the main financial regulator in South Korea, conducted an on-site investigation in connection with Upbit’s August 2024 application to renew its business license and discovered almost 700,000 probable KYC violations. According to the Act of Reporting and Use of Specific Financial Information, the violations might result in fines of up to ₩100 million ($68,596) each infraction.
Upbit has also come under fire from the SEC for providing services to foreign traders in violation of domestic regulations requiring local exchanges to use real-name authentication systems to confirm the identities of South Korean nationals.
Implications for the Operations of Upbit
If the fine is approved, Upbit might be prohibited from onboarding new clients for six months, which would have a big effect on its 70% market share dominance in South Korea’s cryptocurrency sector. A final decision is anticipated the next day, and the exchange has until January 15 to submit its position to the FIU.
Upbit’s application to renew its business license is still pending; it expires in October 2024. According to data from The Block, Upbit ranked as the third-largest centralized exchange in December 2024, with a monthly trading volume topping $283 billion, despite regulatory obstacles.
In order to reduce the dangers connected with fraud and illegal financial activity, South Korean officials have increased their monitoring of the cryptocurrency sector, concentrating on AML and KYC compliance. The instance of Upbit demonstrates the strict steps being put in place to ensure compliance among significant industry players
