- On January 21, South Korea’s FIU will review Upbit’s KYC violations.
- South Korea increases crypto rules, focusing on KYC and client safety.
South Korea’s biggest cryptocurrency exchange, Upbit, is to be present at a disciplinary hearing on January 21, 2025, for violating a series of alleged infractions that are associated with its customer verification processes. The country’s Financial Intelligence Unit had been investigating the exchange since August 2024 for infractions purportedly involving Know-Your-Customer regulations.
The allegations were made during a review carried out when Upbit’s VASP license was up for renewal. Inspectors from the Financial Intelligence Unit found more than 500,000 cases where customers forged or had missing portions of their identification documents. Importantly, some of the documents carried the names as well as the registration numbers, but these were blurry and covered up, thereby raising doubts with regard to the credibility of Upbit’s verification.
South Korea Tightens Cryptocurrency Regulation
This will be the first time that FIU has built a sanctions review based on results from a Virtual Asset Service Provider renewal inspection. If regulators find Upbit failed to meet set standards, it may be liable for as much as 100 million Korean won (or around $71,500) per offense. It will also affect the license of Upbit to operate in Korea.
Currently, South Korea engages in more generalized regulatory activities directed towards improving regulations of cryptocurrencies. The FSC has recently commenced discussions on the second phase of cryptocurrency regulations on stablecoins and consumer protection. Further, it has been reaching out to international nations including the United States and Japan to discuss security issues that in many cases involve hacking issues from North Korea.
The verdict of the disciplinary hearing against Upbit is going to send ripples through the South Korean cryptocurrency market and also affect the overall operation of the exchange. As the Financial Intelligence Unit points out, there has been increasing oversight that cryptocurrency trading platforms are increasingly facing while attempting to meet the anti-money laundering standards without harming market integrity.
It has been a tough time for the cryptocurrency industry because of increased scrutiny from regulators, and this case is a timely reminder of full compliance and the consequences of not being up to par with high legal standards.
