Upbit Korea Faces Closure Risk Due to Violations of Anti-Money Laundering and KYC Regulations

According to Naver News, one of the world’s largest cryptocurrency exchanges, Upbit, is facing the risk of suspension after violating anti-money laundering (AML) and know-your-customer (KYC) regulations in South Korea.

Specifically, the Financial Intelligence Unit (FIU) under South Korea’s Financial Services Commission (FSC) issued a warning notice to Upbit on January 9. The exchange has until January 20 to submit its response before a final decision is made on January 21, 2025. If penalties are enforced, Upbit could be prohibited from onboarding new customers for six months, although current transactions would remain operational.

This issue arose during an investigation that began in November 2024, following Upbit’s application for an extension of its business license, which had expired in October 2024. Regulators uncovered approximately 700,000 instances of KYC violations. Under South Korean law, each violation could result in fines of up to 100 million won (approximately $68,596).

The FIU noted that Upbit violated regulations by serving foreign customers, while South Korean law permits exchanges to serve only verified South Korean citizens.

Experts believe this move reflects the South Korean government’s determination to regulate the cryptocurrency market and tighten anti-money laundering measures to protect users. However, many industry players are concerned about the impact of such penalties on Upbit’s license renewal process and the potential for additional financial sanctions.

Related: Upbit Exchange Refunds $6 Million to Users

Founded in 2017, Upbit currently holds over 70% market share in South Korea and ranks third globally in trading volume, recording over $283 billion last month. The exchange’s influence is evident through the “Upbit Listing Effect,” where newly listed coins often experience significant surges. Notably, tokens such as Mocaverse (MOCA), Ancient8 (A8), and Drift Protocol (DRFIT) have nearly doubled in value after their Upbit listings.