Upbit Faces Billion-Won Fines, Operational Restrictions Amid KYC Violations
1min read South Korea's Financial Services Commission (FSC) is set to impose heavy sanctions on Upbit, the country's largest cryptocurrency exchange, following an investigation that uncovered over 700,000 violations of Know Your Customer (KYC) regulations. The FSC's probe, launched in November 2024, accuses Upbit of failing to properly verify customer identities, a critical measure designed to protect users against financial crimes. The exchange is also suspected of facilitating transactions with unlicensed platforms, further heightening regulatory concerns.
The FSC has proposed significant penalties, with fines potentially reaching tens of billions of won. Under the Special Financial Transactions Act, each violation could cost Upbit up to $68,600. In addition to financial penalties, the FSC is considering operational restrictions, including temporary suspensions or limits on new user registrations, which could disrupt South Korea's crypto trading ecosystem, as Upbit handles more than 80% of the country's digital asset transactions.
The crackdown on Upbit is sending shockwaves through the country's broader crypto industry. Other major exchanges, including Korbit, GOPAX, Bithumb, and Coinone, have already been subjected to on-site inspections, signaling a wider regulatory sweep. This heightened regulatory pressure follows the implementation of South Korea's new Virtual Asset User Protection Act, which took effect in July 2024 and reinforced stricter oversight across the sector.
Despite the current allegations, Upbit has long been regarded as a leader in compliance. In 2021, it was the first exchange to register under South Korea's revamped regulatory framework and pioneered real name verification for crypto transactions. However, its latest legal troubles mark a shift toward even stricter enforcement. As Upbit's parent company, Dunamu, continues discussions with regulators, the FSC's final decision will determine Upbit's future and reshape compliance expectations across the industry.
