The South Korean Financial Intelligence Unit (FIU) has instructed Upbit to temporarily suspend services for new users due to multiple violations of the Specific Financial Transaction Information Act.
South Korean Crypto Industry Watches Upbit Case Closely
South Korea’s Financial Intelligence Unit (FIU) has reportedly directed Upbit, one of the largest cryptocurrency exchanges in the country, to cease operations for non-compliance with the Specific Financial Transaction Information Act.
The directive, issued on January 9, mandates that Upbit refrain from offering services to new users for a maximum of six months. Existing users will be allowed to continue using the platform without any restrictions. Upbit mentioned that the sanction, if enforced, is likely to prevent new users from transferring cryptocurrency assets off the exchange for a specified period.
Although this directive is not anticipated to significantly disrupt its activities, Upbit, which purportedly controls 70% of the trading volume in Korea, can file an objection with the FIU by January 20. A hearing on this issue is expected to take place the next day.
According to a local report, other South Korean cryptocurrency exchanges are closely monitoring the FIU’s potential enforcement action against Upbit, eager to understand its consequences. As indicated in the report, South Korea’s digital asset industry is closely observing this development, as it could affect Upbit’s upcoming license renewal process.
Following an on-site inspection conducted in August 2024, the FIU reportedly identified over 700,000 instances where know-your-customer (KYC) procedures were mishandled. Some within South Korea’s digital asset industry are keen to ascertain the penalties that the FIU may levy. Under the Specific Financial Transaction Information Act, violations akin to those allegedly committed by Upbit could result in fines of up to $68,600 (100 million won).
In the meantime, Upbit has pledged to utilize all available avenues to contest the FIU’s decision.
