South Korean authorities have issued a suspension notice against Upbit, the country’s largest crypto exchange, for suspected anti-money laundering (AML) infractions related to Know Your Customer (KYC) compliance, according to Naver.
Although current users will still be able to make regular transactions, this legislative action may cause Upbit’s new client registrations to be suspended for up to six months. The final decision on the suspension is likely to be made on January 21, 2025.
**Upbit Faces Growing Pressure from Regulatory Investigations**
The accusations against Upbit stem from a comprehensive investigation initiated by the Financial Intelligence Unit (FIU) of South Korea in late August 2024. The FIU discovered between 500,000 and 600,000 potential KYC rule violations during the audit.
These findings highlight significant deficiencies in the exchange’s user verification systems, which authorities argue could facilitate illegal activities such as money laundering. Should Upbit be found guilty, it may also face monetary fines of up to 100 million won (approximately $75,000) for each violation, thereby intensifying the scrutiny from regulators.
In addition to these allegations, Upbit has been under ongoing parliamentary scrutiny in South Korea, with a focus on its substantial market share. Legislators have voiced concerns regarding potential monopolistic practices and the overall impact of the exchange on the local cryptocurrency market. These developments align with South Korea’s increasing regulatory stance towards digital assets, aimed at ensuring greater user protection and transparency.
The concurrent political unrest in South Korea has also impacted the bitcoin industry. President Yoon Suk Yeol’s unexpected declaration of martial law in December 2024 sent traders into a frenzy, resulting in a significant 30% drop in the value of Bitcoin against the Korean won on Upbit.
Although the situation stabilized hours after the martial law was lifted, the incident revealed the volatile intersection of politics and the cryptocurrency market.
On another note, CNF previously reported a major security breach associated with Upbit, wherein North Korean hackers stole 342,000 ETH in 2019 and laundered the funds through exchanges across more than 51 countries. Only 4.8 BTC was recovered from this billion-dollar crime despite collaborative investigations by South Korea and the FBI.