South Korea’s Financial Regulator Penalizes Upbit Crypto Exchange

South Korea’s financial regulator has imposed a penalty on Upbit crypto exchange, suspending operations due to alleged anti-money laundering violations, particularly in meeting know-your-customer obligations, as reported by the local news outlet Maeil Business Newspaper on Thursday.

The Financial Intelligence Unit, an agency of the country’s top financial regulator, notified Upbit on January 9 about the penalty. Upbit has until next Monday to respond to the FIU regarding the penalty, with a final decision expected the following day.

Once the penalty is finalized, Upbit, the largest crypto exchange in South Korea, may face restrictions on doing business with new customers for up to six months, according to Maeil.

Following Upbit’s application to renew its business license in August, the FIU conducted on-site inspections and reportedly found around 700,000 suspected violations of know-your-customer obligations. Under South Korea’s Act of Reporting and Use of Specific Financial Information, Upbit could incur fines of up to 100 million Korean won ($68,596) per violation.

The report highlighted that the FIU has raised concerns about Upbit servicing overseas traders, as local regulations restrict domestic exchanges to real name-verified South Korean citizens only.

Upbit’s business license expired in October of last year, and its renewal application remains under review. Established in 2017, the exchange holds about a 70% market share in the local crypto market and was ranked as the third largest centralized exchange worldwide last month in trade volume, processing over $283 billion in transactions.

The Block has contacted both the FIU and Upbit for further comments.