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Crypto Exchange Upbit Hit with Suspension Notice in South Korea Over KYC Violations
The crypto industry is abuzz after reports emerged of Crypto Exchange Upbit receiving a suspension notice from the Financial Intelligence Unit (FIU) of the Financial Services Commission (FSC) in South Korea. The notice allegedly stems from extensive investigations into allegations of Know-Your-Customer (KYC) violations.
According to sources, authorities discovered large-scale cases where customer identification procedures were not properly followed. Specifically, Upbit opened thousands of accounts without proper verification, thereby failing to comply with anti-money laundering and Combating the Financing of Terrorism (CFT) requirements. This move is seen as a major blow for the exchange, which has been plagued by regulatory issues in recent times.
The FIU’s investigation reportedly identified around 600,000 cases where KYC was not properly executed, raising concerns about the potential for massive fines and reputational damage for the exchange. As per reports, Upbit could be slapped with fines of up to 100 million won per case ($68,000), potentially amounting to a staggering $40 billion if all instances were confirmed.
In addition to these allegations, authorities also discovered that Upbit had allegedly offered its services to unverified businesses overseas. South Korean regulations stipulate that local exchanges can only conduct transactions with registered service providers.
This development comes at a critical juncture for the crypto industry in South Korea, where the government is preparing to enter the second phase of its new crypto investor protection laws. Phase one focused on safeguarding customer deposits and tackling unfair trading practices. The second phase will concentrate on closing regulatory gaps related to crypto asset issuance and distribution.
The crypto community is now eagerly awaiting the consequences of these findings, as the license renewal process for Upbit hangs in the balance. In a recent report, authorities’ extensive investigations have affected the exchange’s extended timeline for licensing renewal, which expired in October.
Industry observers believe that this suspension notice may lead to significant repercussions for Upbit’s business and overall reputation.
Source: bitcoinist.com
