South Korea’s Largest Cryptocurrency Exchange Shocked by Investigation! Here Are the Details

South Korea’s largest cryptocurrency exchange, Upbit, is being investigated by the Financial Intelligence Unit (FIU) of the Financial Services Commission (FSC) for allegedly violating Know Your Customer (KYC) requirements.

Upbit Under Scrutiny Following License Renewal Review

The investigation was conducted as part of Upbit’s periodic business license renewal process, and at least 500,000 to 600,000 instances of suspected improper KYC procedures were identified during the review.

FIU Investigation Findings

The FIU began its on-site review of Upbit in late August, after the exchange filed its renewal application.

Initial findings revealed numerous instances where identification documents provided by users were unclear or incomplete, but were still accepted during account creation.

Designed to prevent money laundering (AML) and combat the financing of terrorism (CTF), the KYC process requires exchanges to verify user identities through government-issued IDs before allowing transactions.

However, the FIU has identified cases where blurred or incorrectly captured details, such as names or registration numbers, were used to open accounts. Such omissions increase the risk that accounts will be misused for illegal activities.

Potential Results

The magnitude of the suspected breaches has drawn attention to the potential penalties Upbit could face. Under South Korea’s Reporting and Use of Designated Financial Transaction Information Act (commonly known as the Special Financial Transactions Act), violations of KYC obligations can result in fines of up to 100 million KRW (approximately $74,000) per case.

*This is not investment advice.