- These alleged breaches include the acceptance of identification documents with obscured personal information.
- Upbit has been under investigation by South Korean financial authorities since August 2024.
South Korea’s Financial Intelligence Unit (FIU) is set to conduct a disciplinary hearing on January 21 to evaluate Upbit, the nation’s largest cryptocurrency exchange, for alleged violations of Know-Your-Customer (KYC) regulations.
During a recent on-site inspection tied to the renewal of Upbit’s Virtual Asset Service Provider (VASP) license, the FIU identified over 500,000 instances where customer verification processes may have been compromised. These alleged breaches include the acceptance of identification documents with obscured personal information. Such as blurred names or registration numbers, which hinder accurate user identification.
Under Stringent Investigation
This upcoming hearing is unprecedented. Marking the first time the FIU has convened a sanctions review meeting based on findings from a VASP renewal inspection. The outcome could lead to significant penalties for Upbit. Including fines of up to 100 million Korean won (approximately $71,500) per violation, and may influence the renewal status 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 imposed. Given Upbit’s prominence in the global cryptocurrency market, the FIU’s decision could have far-reaching implications for the industry.
This development occurs amid South Korea’s broader efforts to establish a comprehensive regulatory framework for cryptocurrencies. The Financial Services Commission (FSC) has recently initiated discussions on the second phase of crypto regulations, focusing on areas such as stablecoins and consumer protection. Additionally, South Korea has collaborated with the United States and Japan to address emerging crypto-related threats, including those posed by North Korean hackers.
The FIU’s scrutiny of Upbit underscores the increasing regulatory attention on cryptocurrency exchanges in South Korea, highlighting the importance of stringent compliance with KYC and anti-money laundering standards to ensure market integrity and user security.
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