Upbit’s mother or father firm, Dunamu, has reportedly filed a lawsuit in opposition to South Korea’s Monetary Intelligence Unit (FIU) — a division beneath the nation’s prime market regulator, the Monetary Providers Unit (FSC) — difficult its imposed sanctions.
Dunamu informed the state-funded Yonhap Information Company on Feb. 28 that it had submitted a lawsuit to the Seoul Administrative Courtroom on Feb. 27 searching for to overturn the FIU’s partial enterprise suspension order. The corporate additionally utilized for an injunction to halt the enforcement of the sanctions.
The lawsuit follows the FIU’s partial suspension of Upbit’s operations, which restricts the change from processing exterior crypto transactions for brand spanking new clients. Providers for present clients stay unaffected.
Along with the suspension, the FIU additionally imposed disciplinary measures in opposition to Upbit and its executives for violating native laws. A complete of 9 executives, together with the CEO, confronted disciplinary actions.
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Whereas the CEO acquired a proper reprimand, the corporate’s compliance officer turned the primary compliance officer at a South Korean crypto change to be dismissed by regulators.
How Upbit’s monopoly suspicions led to a partial enterprise ban
Based in 2017, Upbit is South Korea’s largest cryptocurrency change. In October 2024, throughout a parliamentary audit, the FSC confronted scrutiny over its plans to examine potential anti-monopoly violations by Upbit.
South Korean lawmaker blames FSC for enjoying favorites with Upbit in October’s authorities audit. Supply: Nationwide Meeting
The FIU introduced in November that it had recognized at the very least 500,000 violations associated to Know Your Buyer (KYC) compliance at Upbit. This was adopted by a enterprise suspension discover in January 2025.
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Upbit’s alleged KYC violations and suspicious transactions
The FIU accused Upbit of facilitating roughly 45,000 transactions with unregistered overseas crypto exchanges, which it claims is a violation of the Act on Reporting and Utilizing Specified Monetary Transaction Data.
Regulators additionally recognized severe deficiencies in Upbit’s buyer verification processes, corresponding to accepting photocopied ID playing cards as an alternative of originals and approving submissions with key identification particulars obscured.
In circumstances the place clients submitted driving licenses for verification, the FIU discovered almost 190,000 situations the place checks have been carried out solely based mostly on private data with out verifying the authenticity of the cardboard utilizing the encrypted serial quantity discovered on South Korean driving licenses. Throughout buyer re-verification, the probe recognized over 9 million circumstances the place no official identification paperwork have been collected.
Throughout a take a look at of Upbit’s buyer verification system, a subcontractor dealing with Dunamu’s KYC operations hand-drew an ID card as a part of the take a look at. The system verified it as a reliable ID. Nonetheless, since this was carried out for system testing functions, the FIU didn’t classify it as a regulatory violation.
A drawing passes Upbit’s verification system. Supply: Monetary Intelligence Unit
Responding to the restriction, Upbit mentioned in an announcement that it has reviewed the required enhancements and has accomplished the required corrective measures.
“Nonetheless, we imagine that sure circumstances and particulars relating to the explanations for among the sanctions and their severity weren’t totally thought-about. Subsequently, we are going to faithfully current these factors by the procedures stipulated by the related laws,” Upbit mentioned.
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