Upbit has until Jan. 20 to address the FSC’s suspension notice or face a six-month ban on new registrations.
Reportedly, Upbit, one of the largest cryptocurrency exchanges in South Korea, has been issued a suspension notice for purported violations of the Know Your Customer (KYC) policy.
The cryptocurrency exchange has been informed of potential punitive measures by the Financial Intelligence Unit (FIU) of the Financial Services Commission (FSC) of South Korea, according to a report published by Naver on January 16.
The authorities intend to suspend new user registrations on Upbit for a period of six months as part of the measures while existing users will remain unaffected.
According to the report, Upbit has until January 20 to provide the FIU with its feedback on the restrictions. On January 21, the authority intends to render a definitive determination regarding the penalty.
Most Significant Cryptocurrency Exchanges In South Korea In terms Of Volume Is Upbit
The FIU identified at least 500,000 to 600,000 transgressions in its client identification process, and South Korean authorities first reported on Upbit’s alleged KYC violations in November 2024.
The authority identified Upbit’s KYC violations during the evaluation of the company’s business license renewal.
According to CoinGecko, the cryptocurrency exchange, which was established in 2017, is one of the largest cryptocurrency exchanges in South Korea and the world, with a daily transaction volume of $7.5 billion.
South Korea’s KYC Penalties Are As High As $68,600 Per Case
KYC violations may result in penalties of up to 100 million Korean won (approximately $68,600) per instance, as stipulated by South Korea’s Special Financial Transactions Act.
The company could potentially incur a loss of $34.3 billion as a result of the discovery of at least 500,000 KYC breaches at Upbit.
Furthermore, the Special Act on Financial Transactions mandates that local crypto companies are prohibited from engaging in transactions with unregistered crypto service providers.
Upbit has also violated this provision by engaging in business with unregistered crypto service operators, according to Naver.
The FSC and Upbit were contacted by Cointelegraph for a comment on the suspension notice; however, no response was received by the publication deadline.
The announcement is made in the context of South Korean authorities’ ongoing litigation against Lee Jung-hoon, the former chairman of the prominent local cryptocurrency exchange Bithumb.
Lee was reportedly acquitted in an appeal trial related to a large-scale customer data breach on Bithumb that occurred in 2017 and affected 31,000 user accounts on January 16.
