TL;DR
- Upbit’s operator, Dunamu, is evaluating an appeal against the 35.2 billion won ($25 million) fine imposed by the FIU.
- The fine is due to 5.3 million cases of customer verification (KYC) violations and 15 failures to report suspicious transactions.
- The sanction includes a three-month ban on onboarding new customers for the country’s leading exchange.
Dunamu, the operator of South Korea’s largest cryptocurrency exchange, Upbit, announced that it is evaluating an appeal against the sanction imposed by the Financial Intelligence Unit (FIU), the enforcement arm of the country’s financial regulator.
The sanction includes a hefty fine amounting to 35.2 billion won (approximately $25 million), along with a three-month suspension from onboarding new customers and formal warnings to its executives.
A spokesperson for the operator confirmed their stance via email, stating that they are conducting “a careful internal review, including an assessment of the accuracy of the sanction’s findings,” and reminded that the FIU has issued rulings that have been overturned by courts in the past.
The Upbit AML non-compliance fine stems from exhaustive inspections carried out by the FIU, framed within a broader national initiative to strengthen the enforcement of anti-money laundering (AML) and know-your-customer (KYC) regulations in the digital asset sector.
The Financial Intelligence Unit discovered approximately 5.3 million cases of “violations related to customer verification obligations” at Upbit’s operator, in addition to 15 failures to report suspicious transactions.
Although Upbit assures that they have reinforced their investor protection measures, the impact of a three-month suspension for new users could be significant for the exchange, which is one of the main gateways to the South Korean crypto market and, according to recent data, handles a large volume of the country’s combined operations.
South Korea’s Broad Regulatory Sweep
The FIU’s surveillance campaign has just begun. In fact, the agency confirmed that it will continue inspecting and reviewing the legal compliance systems of other virtual asset operators.
The inspections are being carried out in an orderly “first-in, first-out” sequence, which has put other major exchanges like Bithumb, Coinone, Korbit, and GOPAX in the spotlight, where violations of various rules have already been found.
Investors and the crypto community should await the results of Dunamu’s possible appeal, as it would set a precedent for the rigidity of regulatory demands.
Likewise, regulatory pressure extends to the crypto lending market, where the Financial Services Commission (FSC) has ordered the suspension of new products until formal guidelines are implemented, indicating continuous and strict oversight across the entire digital ecosystem.
