Upbit, South Korea’s Largest Crypto Exchange, Sanctioned From Accepting New Users

Key Takeaways

• FIU has sanctioned Upbit, the country’s largest crypto exchange, for KYC violations.
• The three-month penalty bars the platform from offering deposit and withdrawal services to new customers.
• Upbit argues it has addressed compliance issues and will challenge the FIU’s decision.

South Korea’s Financial Intelligence Unit (FIU) has imposed sanctions on Upbit, the country’s largest cryptocurrency exchange, citing violations of Know Your Customer (KYC) regulations.

The FIU accused Upbit’s operator, Dunamu, of failing to verify customer identities properly and engaging in monopolistic practices.

As a result, new users will be restricted from making crypto deposits or withdrawals between March 7 and June 6. Existing customers can continue trading as usual.

FIU Tightens Oversight Amid Compliance Failures

The enforcement measures stem from violations of the Specific Financial Information Act, which mandates that virtual asset exchanges verify customer identities and report financial transactions accurately.

Regulators found that Upbit had processed transactions for users who submitted blurry or incomplete identification documents, leading to 34,777 KYC violations.

Additionally, the FIU flagged 5,785 instances where users provided incomplete or incorrect address details.

Authorities also discovered that Upbit, along with other global exchanges like MEXC and KuCoin, facilitated 44,948 virtual asset transfers with 19 unregistered foreign virtual asset service providers—a direct violation of compliance laws.

“Given the strict sanctions imposed for violations of the Act on Reporting and Using Specified Financial Transaction Information, virtual asset businesses must ensure full compliance with their obligations under the law,” an FIU official stated .

Upbit Pushes Back, Plans to Appeal FIU’s Decision

Upbit has rejected the FIU’s findings, stating that it has already made the necessary compliance improvements and that regulators have failed to consider key factors.

The exchange plans to challenge the ruling through official legal channels, arguing that the imposed restrictions are excessive.

In a statement published by Yonhap News, Upbit assured users that once the FIU lifts the sanctions, new customers will regain full access to its services.

Regulatory Scrutiny Increases as Penalties Loom

This latest penalty adds to Upbit’s ongoing regulatory troubles. In November 2024, the Financial Services Commission (FSC), the country’s financial regulator, flagged the exchange for KYC violations, warning that non-compliance could lead to fines and operational restrictions.

If further violations are found, Upbit could face penalties reaching $34 billion, according to estimates from regulatory analysts.

With South Korea tightening its grip on crypto regulations, exchanges are under growing pressure to align with compliance mandates—or risk severe consequences.