- These alleged violations include the acceptance of identification documents with hidden personal information.
- Upbit has been under investigation by South Korean financial authorities since August 2024.
South Korea’s Financial Intelligence Unit (FIU) will conduct a disciplinary hearing on January 21 to evaluate Upbit, the country’s largest cryptocurrency exchange, for alleged violations of Know-Your-Customer (KYC) rules.
During a recent on-site inspection linked to the renewal of Upbits Virtual Asset Service Provider license (VASP), FIU identified over 500,000 cases where customer verification processes may have been compromised. These alleged violations include the acceptance of identification documents with hidden personal information. Such as blurred names or registration numbers, which prevent correct user identification.
Under heavy investigation
This upcoming hearing is unprecedented. This marks the first time the FIU has convened a meeting to review sanctions based on findings from a VASP renewal inspection. The result could lead to significant penalties for Upbit. Including fines of up to 100 million Korean won (about US$71,500) per violation, and may affect the renewal of the exchange’s operating license.
Upbit has been under investigation by South Korean financial authorities since August 2024. The exchange’s explanations during the disciplinary meeting will be crucial in determining the severity of any sanctions. Given Upbit’s prominence in the global cryptocurrency market, the FIU’s decision could have far-reaching implications for the industry.
This development comes amid South Korea’s broader efforts to establish a comprehensive regulatory framework for cryptocurrencies. Financial Services Commission (FSC) have recently begun discussions on the second phase of crypto regulations, focusing on areas such as stablecoins and consumer protection. In addition, South Korea has been working with the US and Japan to address emerging crypto-related threats, including those posed by North Korean hackers.
FIU’s review of Upbit underscores the increasing regulatory attention on cryptocurrency exchanges in South Korea, emphasizing the importance of strict compliance with KYC and anti-money laundering standards to ensure market integrity and user security.
