TL;DR:
- A South Korean court annulled the partial suspension imposed by the FIU on Dunamu, operator of the Upbit exchange, due to regulatory gaps.
- The court determined that AML regulations for smaller transfers were not sufficiently specific, which undermined the legal basis of the sanction.
- The ruling closes a litigation of more than a year that began after the February 2025 suspension, which restricted new users from accessing Upbit.
The Seoul Administrative Court annulled the three-month partial suspension that the Financial Intelligence Unit (FIU) of South Korea had imposed on Dunamu, operator of the Upbit cryptocurrency exchange. The measure was reported by the Yonhap News agency and brings to a close a legal process that stretched over more than a year.
The South Korean court determined that, while clear rules existed for transactions exceeding 1 million won (approximately $675), the regulations applicable to smaller transfers were not sufficiently specific. That lack of regulatory precision undermined the basis on which the FIU had grounded the sanction for alleged violations of anti-money laundering (AML) rules.
Opaque Regulations in South Korea
Regarding the central argument of the South Korean regulator—that Dunamu failed to adopt adequate compliance measures—the court found that the FIU itself had not provided concrete guidance on what actions were required. In that context, the court considered that the company had taken its own measures and that, even if these proved insufficient in hindsight, it was not possible to conclude that Dunamu had breached its obligations through willful misconduct or gross negligence.
The ruling limits the FIU’s ability to impose significant AML sanctions on exchanges when the underlying compliance standards are not defined with sufficient clarity in practice.
A Victory for Dunamu
The FIU had imposed the suspension on February 25, 2025, following an on-site inspection that detected transactions with unregistered foreign virtual asset providers and deficiencies in due diligence requirements. The regulator also identified more than 600,000 alleged violations of Know Your Customer (KYC) rules during a review of Upbit‘s operating license.
Dunamu responded by filing a lawsuit and requesting an injunction to suspend enforcement of the sanction. On February 28, the company formally confirmed the start of the legal process. On March 27, the court granted the injunction, allowing Upbit to continue onboarding new users while the case remained under review. The final ruling consolidates that position and brings the dispute to a close.
