South Korea’s Financial Services Commission will soon make a decision on sanctions against Upbit, the country’s largest cryptocurrency exchange, following lapses in customer identity verifications.
Upbit crypto exchange, which controls more than 70% of the local crypto market, has been found in violation of obligations critical to preventing money laundering. Over 700,000 rule violations were discovered during a review of its business license renewal, according to The Korea Times.
These violations could lead to fines totaling billions of shillings, with penalties of up to $68,600 for each breach under the country’s Special Financial Transactions Act.
Kim Byoung-hwan, FSC governor, emphasized the urgency of the case, stating that a conclusion would be reached swiftly. Speculation suggests that Upbit could face a business suspension of up to six months or a fine, with new user registration potentially restricted.
The digital asset ecosystem in South Korea has seen significant transformation since the Virtual Asset User Protection Act was enacted in July 2024, increasing regulatory pressure on exchanges. Upbit’s case is being closely watched by the industry because it could set a precedent for more stringent regulation across the board.
Upbit’s legal issues follow a previous 2017 Bithumb data hack, which exposed over 31,000 user accounts and resulted in stricter rules for cryptocurrency companies operating in South Korea. Going forward, the FSC’s decision will clearly demonstrate the government’s dedication to a digital asset ecosystem that is safer and more compliant.
