Upbit faces potential suspension over AML violations
Upbit faces potential sanctions for 700,000 KYC lapses
Upbit, which accounts for over 70% of South Korea’s cryptocurrency trading volume, has received a notification regarding a potential suspension of operations due to alleged violations of anti-money laundering (AML) obligations.
The Financial Intelligence Unit (FIU) of South Korea’s Financial Services Commission (FSC) has accused the exchange of failing to comply with proper Know Your Customer (KYC) protocols in approximately 700,000 cases, according to the Maeil Business Newspaper.
Under the Specific Financial Transaction Information Act, such violations could result in fines of up to 100 million won per incident. Additionally, the FIU alleges that Upbit engaged in transactions with unregistered overseas cryptocurrency platforms, further contravening local regulations.
Potential sanctions
The potential sanctions include a six-month suspension on onboarding new customers, although existing users would still be able to trade. The FIU is scheduled to hold a meeting on January 21 to finalize its decision, while Upbit has until then to respond to the allegations.
This regulatory action comes at a critical juncture for Upbit, as the renewal of its business license has been under review since its expiration in October 2024. A suspension or other severe penalties could impact the exchange’s operations and its competitive standing in South Korea’s cryptocurrency market.
Industry impact and regulatory focus
Upbit’s dominance in the local cryptocurrency landscape makes this case significant for the broader industry. Experts believe the outcome could set a precedent for how regulators enforce AML compliance in South Korea’s rapidly growing crypto sector.
The FIU’s actions underscore the country’s increasing focus on robust compliance measures to combat money laundering and other illicit activities within the digital asset space.
In 2024, Upbit announced that its subsidiary, Upbit Singapore, had received a Major Payment Institution (MPI) license from the Monetary Authority of Singapore (MAS). This license enables the exchange to offer a full range of financial services based on advanced digital asset solutions to institutional and retail clients in Singapore.
