South Korea’s FIU Investigates Upbit for 600K KYC Violations

• Upbit is investigated for 600,000 KYC violations by South Korea’s FIU.
• Fines could reach millions, threatening Upbit’s business license renewal.

South Korea’s largest cryptocurrency exchange, Upbit, faces an investigation for alleged violations of Know Your Customer (KYC) procedures. The Financial Intelligence Unit (FIU) has flagged between 500,000 and 600,000 identification issues during the review of Upbit’s business license renewal.

The FIU uncovered numerous instances of blurred names or incomplete data in submitted identification documents. Despite these flaws, Upbit approved these accounts. Such oversights raise concerns about potential money laundering or criminal activities.

South Korean regulations mandate strict KYC compliance for virtual asset service providers (VASPs). Since 2018, exchanges have required real-name verified bank accounts to curb financial misconduct. The FIU’s findings suggest Upbit failed to meet these standards.

Fines and Licensing at Risk

Under South Korea’s Special Financial Information Act, VASPs must renew their licenses every three years. Non-compliance with KYC can result in fines of up to 100 million won ($71,500) per violation. Given the high number of alleged violations, potential fines could reach millions. The FIU’s decision will determine whether Upbit retains its operating license. Losing the license could severely impact its operations and the broader cryptocurrency market.

This investigation follows an anti-monopoly probe against Upbit by the Financial Services Commission (FSC). The exchange’s close relationship with K-Bank, a financial institution heavily tied to crypto deposits, triggered regulatory concerns. K-Bank handles up to 70% of its deposits from cryptocurrency-related accounts.

These developments coincide with K-Bank withdrawing its $732 million IPO in October. The IPO faced criticism of overvaluation concerns and reliance on cryptocurrency funding.

Upbit processes over $2 billion in daily trades, making it South Korea’s largest exchange. It handled $48.2 billion in October 2024, reflecting its dominance in the local market. The FIU’s final verdict will not only shape Upbit’s future but also set a precedent for regulatory enforcement in South Korea’s crypto industry.

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