South Korea’s Financial Regulator Issues Suspension Notice to Crypto Exchange Due to KYC Violations

Crypto Exchange Upbit Faces Suspension Notice in South Korea over KYC Violations

South Korea’s Financial Intelligence Unit (FIU) has issued a suspension notice to the country’s fourth-largest crypto exchange, Upbit, following allegations of massive Know-Your-Customer (KYC) violations. This drastic measure comes after an investigation revealed that the platform failed to properly verify thousands of accounts, breaching anti-money laundering and Combating the Financing of Terrorism (CFT) requirements.

According to reports, Upbit allegedly opened over 600,000 accounts without adhering to proper identification procedures, potentially exposing millions of users to financial risks. This staggering number could result in fines of up to $68,000 per case, totaling a staggering $40 billion if all instances were confirmed and fined.

The suspension notice has sent shockwaves throughout the industry, sparking concerns about the potential impact on Upbit’s business license renewal. The exchange is currently in the process of renewing its three-year- expired license, with officials reviewing the application amid ongoing investigations.

As part of its efforts to strengthen crypto investor protection, South Korea is entering the second phase of its Virtual Asset User Protection Act, which aims to address regulatory gaps and close loopholes in the virtual asset industry. The new measures aim to safeguard user deposits and tackle unfair trading practices, ensuring the integrity of the financial system.

This latest development highlights the growing concern around lax security standards at major exchanges, particularly with regards to Know-Your-Customer (KYC) procedures. As the global crypto landscape evolves, regulators are increasingly scrutinizing exchanges’ compliance with anti-money laundering and Combating the Financing of Terrorism regulations, underscoring the urgent need for improved transparency and accountability.

In response to these allegations, Upbit has yet to comment publicly on the situation. The exchange’s prolonged license renewal process has sparked uncertainty among users, who await clarification on the matter.

As the crypto community continues to monitor this unfolding crisis, it remains unclear how these sanctions will affect Upbit’s business prospects and the country’s broader digital asset ecosystem.

Source: bitcoinist.com