Originally published on: November 15, 2024
Reports have emerged that Upbit, a major cryptocurrency exchange in South Korea, is facing potential breaches in Know Your Customer (KYC) procedures as part of its local license renewal process.
The Financial Intelligence Unit (FIU) of the Financial Services Commission (FSC) in South Korea has flagged between 500,000 to 600,000 possible KYC violations by Upbit, according to local news agency Maeil Business Newspaper (MK).
Under South Korean regulations, cryptocurrency exchanges like Upbit are required to implement strict KYC measures to prevent money laundering and terrorist financing.
The regulations were strengthened in 2018, with the FSC introducing mandatory registration for all crypto exchanges to ensure compliance with KYC and Anti-Money Laundering (AML) protocols.
The FIU’s review of Upbit’s license renewal allegedly revealed instances where the exchange failed to adhere to KYC procedures. For example, Upbit reportedly allowed users to open accounts using IDs with obscured personal information, making it challenging for regulators to verify their identities.
As a result of these alleged violations, Upbit could face fines of 100 million Korean won ($71,500) per case, as well as potential issues with its license renewal.
Established in 2017, Upbit is a prominent player in the global cryptocurrency market, with daily trading volumes reaching $2.2 billion, as reported by CoinGecko.
The investigation into Upbit’s KYC practices follows previous scrutiny by authorities regarding the exchange’s relationship with K-Bank and concerns over potential anti-monopoly breaches.
K-Bank, which has faced regulatory scrutiny due to its heavy involvement with crypto exchanges, recently withdrew its $732 million IPO in Seoul, citing concerns over valuation and reliance on cryptocurrency funding.
The developments surrounding Upbit’s alleged KYC violations and regulatory challenges highlight the increasing scrutiny faced by cryptocurrency exchanges in South Korea and the broader implications for the industry.
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