Upbit, a leading cryptocurrency exchange, has been slapped with a significant penalty by South Korea’s Financial Services Authority (FSA) for failing to comply with regulations related to the Know Your Customer (KYC) process, a crucial component of anti-money laundering efforts.
On January 9, 2025, the Financial Intelligence Unit (FIU) of the Financial Services Commission imposed sanctions on the exchange, which will prevent Upbit from onboarding new users temporarily and restrict its ability to process virtual asset withdrawals for up to three months. However, existing customers will still be able to trade on the platform.
Upbit, which controls over 70% of Korea’s crypto trading market, has been given until December 20, 2025, to address the issues raised by the FIU. A hearing to finalize the penalties will take place on December 21, 2025.
Investigations revealed that Upbit had failed to carry out proper KYC procedures in up to 700 instances. KYC, a critical process to prevent money laundering and terrorism financing, involves verifying customer identities through thorough background checks. The exchange was also found to have engaged with an unreported foreign cryptocurrency service provider, violating South Korea’s Special Restriction Law.
In its defense, Upbit stated that the issue was unintentional, explaining that identifying an unregistered foreign exchange in advance on the blockchain proved challenging.
This penalty follows the introduction of the Virtual Asset User Protection Act in July 2024, which tightened regulations in South Korea’s crypto market. The FSA’s decision reflects its ongoing efforts to strengthen the industry’s legal framework. Additionally, Upbit’s business license renewal is under scrutiny, with the FIU inspecting the process since August 2024.
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