The South Korean Financial Intelligence Unit (FIU) has directed Upbit to temporarily cease services for new users due to numerous 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 instructed Upbit, one of the nation's major cryptocurrency exchanges, to suspend operations for non-compliance with the Specific Financial Transaction Information Act.
The directive, issued on January 9, prohibits Upbit from offering services to new users for a period of up to six months. Existing users will be able to continue using the platform without any restrictions. Upbit mentioned that the penalty, if imposed, may hinder new users from transferring cryptocurrency assets off the exchange for a specified duration.
While this directive is not expected to significantly impact its activities, Upbit, accounting for approximately 70% of the trading volume in Korea, retains the option to file an objection with the FIU by January 20. A hearing on the issue is anticipated to be held by the FIU the subsequent day.
As per a local report, other South Korean cryptocurrency exchanges are closely monitoring the FIU's potential enforcement action against Upbit, curious about the consequences. The virtual asset industry in South Korea is closely observing this development, as it could influence Upbit's upcoming license renewal process.
In an on-site inspection carried out in August 2024, the FIU reportedly identified over 700,000 instances where know-your-customer (KYC) procedures were inadequately handled. Some stakeholders in Korea's virtual asset industry are interested in the penalties that the FIU might impose. Under the Specific Financial Transaction Information Act, violations akin to those allegedly committed by Upbit could lead to fines of up to $68,600 (100 million won).
In the meantime, Upbit has pledged to utilize the available avenues to contest the FIU's decision.