Key Takeaways
- Upbit is South Korea’s largest crypto exchange and the sixth-largest by trading volumes globally.
- Investigators have discovered 500,000 – 600,000 breaches of customer identification processing.
- Under South Korean law, a fine of $68,000 per ID violation could be imposed, totaling over $34 billion.
The largest cryptocurrency exchange in South Korea, Upbit, has received a suspension notice from the nation’s financial regulator over alleged know-your-customer (KYC) violations and failures to comply with anti-money laundering (AML) obligations.
Upbit has until Jan. 20, 2025, to submit feedback on the notice. Authorities intend to announce a final decision tomorrow, Jan. 21, 2025.
Upbit Violations
As per local media outlets, South Korea’s Financial Intelligence Unit (FIU) of the Financial Services Commission (FSC) has given the leading exchange a punitive notice to suspend its business operations.
If authorities follow through on the decision, the exchange will be required to pause new user registrations to the platform for up to six months. Existing users will be able to continue using the exchange as usual.
Under the Special Financial Transactions Act, a penalty fine of up to 100 million won, (or roughly $68,500) can be levied per violation. In theory, this could see the exchange fined upwards of $34 billion.
Investigations
South Korean authorities began investigating the exchange after it was alleged that they had found over 500,000 accounts on Upbit that violated KYC standards.
This includes the discovery of many ID documents featuring blurred and unrecognizable pictures of customers.
Prior to this, South Korean regulators also took Upbit to task over its market dominance, which authorities fear could amount to the exchange operating a monopoly.
Established in 2017, the exchange has since risen to become the sixth-largest crypto exchange by trading volume, drawing over $8 billion in the past 24 hours.
Concerning its sizeable market share, the FSC has also begun looking at Upbit’s partnership with banking partner K-Bank.
Upbit customer funds account for approximately 20% of K-Bank’s deposits, which could experience a bank run if Upbit operations are interrupted.
Eddie is a gaming and crypto writer at CCN. Covering the often weird and wonderful world of Web3 with an adoring, but skeptical eye.
Prior to CCN, Eddie has spent the past seven years working his way through the crypto, finance, and technology industry. He began with PR and journalism with Bitcoin PR Buzz and BitcoinNews.com, eventually working his way to become a copywriter with a dozen firms, including the likes of Polkadot before returning to journalism in 2023.
Having studied Radio production and journalism at University in the UK, Eddie spent a few years making podcasts and presenting on a local London radio station as he built up his writing chops.
A lifelong skateboarder, Eddie can often be found at the skatepark or touring the streets looking for something new to try. That, or kicking back playing JRPGs on his original PSP.
