South Korea Investigates Upbit for 600K KYC Violations

South Korea Upbit faces scrutiny for alleged KYC violations, with potential fines of $71,500 per case.

According to reports, Upbit, a well-known cryptocurrency exchange in South Korea, is suspected of serious violations of Know Your Customer (KYC) protocols as it renews its local license.

According to a story published on November 14 by the local news agency Maeil Business Newspaper (MK), the Financial Services Commission (FSC)’s Financial Intelligence Unit (FIU) in South Korea has discovered between 500,000 and 600,000 possible KYC violations on the Upbit exchange.

While examining Upbit’s business license renewal, the authority allegedly discovered purported client verification violations that could have an impact on the exchange’s operations.

Upbit Accepted Blurry IDs For KYC

Virtual asset service providers (VASPs) and cryptocurrency exchanges in South Korea are required to build up stringent KYC protocols.

The South Korean government attempted to control cryptocurrency trade in January 2018 by limiting it to real-name bank accounts.

After strengthening the rules, the FSC made it essential for all cryptocurrency exchanges to register in order to make sure they adhere to KYC and AML procedures.

The MK report claims that the FIU found numerous instances in which it allegedly violated KYC protocols.

Regulators were unable to adequately identify individuals because Upbit allegedly permitted them to register accounts using IDs that contained obscured personal information, such as names and registration numbers.

In addition to potential problems with it’s business license renewal, Upbit is reportedly facing fines of 100 million Korean won ($71,500) in each case for the suspected client verification infractions.

Upbit Subject Of Monopolistic Investigation

According to CoinGecko, Upbit, which was founded in 2017, is one of the biggest cryptocurrency exchanges in South Korea and the world, with $2.2 billion in daily transactions.

They purported KYC problems were revealed one month after the FCS allegedly declared in October that it would look into the exchange for possible anti-monopoly violations.

Upbit’s intimate ties to K-Bank, which local authorities have long examined because of its extensive exposure to cryptocurrency exchanges, were the subject of its monopoly inquiry.

According to local sources from November 2023, up to 70% of K-Bank’s deposits were associated with cryptocurrency.

According to Bloomberg, K-Bank canceled its $732 million IPO in Seoul in the middle of October due to worries about its exorbitant valuation and reliance on a cryptocurrency operator for finance.

The IPO would have been the biggest public offering in South Korea since 2022.