South Korea Cryptocurrency Exchange Upbit Faces Suspension Due to KYC Violations – TradingView News

South Korea’s largest cryptocurrency exchange, Upbit, is facing a regulatory storm. Accused of violating Know Your Customer (KYC) obligations, the platform faces a suspension that could prevent it from registering new users for six months.

According to local media publication Naver, the Financial Intelligence Unit (FIU), part of South Korea’s Financial Services Commission, issued the suspension notice after reviewing Upbit’s business license renewal.

The FIU takes strict action against KYC failures

According to the report, the regulator detected between 500,000 and 700,000 cases of incorrect KYC checks. The revelations could reportedly lead to fines totaling $34.3 billion, with fines of up to $68,600 per violation under the country’s Special Financial Transactions Law.

Additionally, authorities allege that Upbit violated laws restricting transactions with unregistered foreign cryptocurrency service providers. An FIU spokesperson stated that the executive action highlights a commitment to restoring order and justice in the cryptocurrency space.

While the proposed penalties would only limit new user registrations, the financial and reputational ramifications could be far-reaching. Upbit, which controls more than 70% of South Korea’s cryptocurrency trading volume, reported daily trades exceeding $7 billion in 2024, according to CoinGecko data.

Although the renewal of its commercial license is still under review, the timing of these sanctions may complicate its ability to operate smoothly in the future. The FIU will reportedly finalize its decision on January 21, after giving Upbit the opportunity to present its case by January 20.

This disciplinary action signals a broader regulatory push to strengthen anti-money laundering and counter-terrorism financing measures in the cryptocurrency space.

Tighten regulations

The Virtual Assets User Protection Act, implemented in July 2024, has already reshaped the compliance landscape, forcing exchanges to go beyond more stringent requirements.

The digital asset market is monitoring the situation closely, with concerns that the Upbit case will set a precedent for stricter enforcement across the industry. The controversy followed a 2017 data breach at Bithumb, another major exchange in South Korea, which exposed 31,000 user accounts.

Since then, South Korean regulators have tightened their grip on cryptocurrency companies, as seen in this landmark action against Upbit. The industry is now awaiting the final ruling of the FIU, which will determine the fate of Upbit and the regulatory path for the cryptocurrency sector in South Korea.