James Richardson
South Korea’s Financial Intelligence Unit (FIU), a division under the Financial Services Commission, has issued a penalty notice to Upbit, the country’s largest cryptocurrency exchange, for alleged violations of anti-money laundering (AML) and know-your-customer (KYC) regulations. This news was reported by local outlet Maeil Business Newspaper on Thursday.
The FIU notified Upbit of the penalty on January 9, with the exchange required to submit its response by next Monday. A final decision on the enforcement of the penalty is expected the following day.
If the penalty is finalized, Upbit could face a ban on onboarding new customers for a period of up to six months, significantly impacting its operations. The penalty stems from findings during an on-site inspection by the FIU, which was conducted after Upbit applied for a business license renewal in August.
The inspection revealed approximately 700,000 suspected KYC violations. Under South Korea’s Act on Reporting and Use of Specific Financial Information, each violation could result in fines of up to 100 million Korean won (approximately $68,600).
Violation of Local Crypto Exchange Regulations
The FIU also raised concerns about Upbit providing services to overseas traders. Current regulations mandate that domestic cryptocurrency exchanges in South Korea may only serve real-name-verified South Korean citizens.
Notably, Upbit’s business license expired in October 2024, and the renewal application remains under review.
Dominance in the Crypto Market
Established in 2017, Upbit holds a commanding 70% market share in South Korea’s cryptocurrency exchange sector. Globally, it ranked as the third-largest centralized exchange by trading volume last month, handling transactions worth over $283 billion, according to PRIME’s data dashboard.
This penalty underscores the South Korean government’s commitment to enforcing strict compliance measures in its cryptocurrency market. As one of the most active crypto markets in the world, such regulatory actions highlight the balancing act between ensuring investor protection and maintaining market dynamism.
