Upbit Faces Legal Issues Over KYC Violations in South Korea
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Upbit, South Korea’s biggest cryptocurrency exchange, is facing a lot of problems with the law. The platform was accused of not following the rules for checking who its customers are, known as Know Your Customer (KYC) rules. Because of this, Upbit could be stopped from letting new users join for six months.
According to a report by Naver, a news company in South Korea, the Financial Intelligence Unit (FIU) from the country’s Financial Services Commission (FSC) gave Upbit a notice to stop. This was after they looked over Upbit’s business license renewal.
Upbit Faces Fines AAnd Reputation Risks Amid Regulatory Breaches
The report revealed that that the FIU found about 500,000 to 700,000 cases where Upbit didn’t do proper checks on its customers. If this is true, Upbit might have to pay up to $34.3 billion in fines, with each mistake costing $68,600, based on South Korea’s rules for money transactions.
The authorities say that Upbit also broke rules by working with foreign crypto businesses that weren’t officially registered. A spokesperson from the FIU said the punishment shows that they want to bring fairness and order to the crypto world.
Even though the suspension would only stop Upbit from letting new users sign up, it could still cause a lot of harm to its reputation and finances. Upbit, which does more than 70% of crypto trading in South Korea, had over $7 billion in daily trades in 2024.
Upbit’s Regulatory Challenges Seeks Shape South Korea’s Crypto Future
Upbit’s business license is still being checked, and this punishment might cause trouble for the company later. The FIU will decide what happens on January 21. Upbit can share its side of the story by January 20.
This is part of a plan to keep cryptocurrency exchanges honest, stop money laundering, and fight terrorism. South Korea’s new law, the Virtual Asset User Protection Act, started in July 2024. It brought more rules for exchanges to follow.
People who work with digital assets are watching closely. They worry this could lead to even stricter rules for other exchanges.
In 2017, Bithumb, another exchange in South Korea, had a data breach. This exposed 31,000 user accounts. After this, the rules for crypto businesses got tougher.
Now, regulators are focusing on Upbit. The whole crypto world is waiting to see what happens because it might change how exchanges work in South Korea.
