Summary
- Suspension Imposed: South Korea has partially suspended crypto exchange Upbit for three months due to compliance failures.
- KYC and AML Lapses: The suspension is a result of transactions with unregistered firms and insufficient customer verification processes.
- Market Scrutiny Intensifies: This action is part of South Korea’s broader push for stricter crypto regulations amid growing adoption.
One of South Korea’s leading cryptocurrency exchanges, Upbit, has been subjected to a partial three-month operational halt by national financial regulators. This punitive measure arises from identified deficiencies in Upbit’s adherence to regulatory standards. The sanctions, which include limitations on transactions for new clientele, are a direct consequence of infractions related to engaging with unregistered entities and shortcomings in verifying customer identities.
Authorities discovered that Upbit had been conducting business with virtual asset companies lacking proper registration and had not fully implemented mandated anti-money laundering (AML) protocols and Know Your Customer (KYC) procedures. Consequently, spanning from March 7th to June 6th of 2025, the platform will be barred from facilitating virtual asset transfers for newly onboarded users. Importantly, current account holders may go on without any inconvenience.
Apart from the operating suspension, the exchange is required to undertake internal compliance checks and suffers financial fines. These effects might affect Upbit’s position within the competitive South Korean bitcoin market.
Upbit has publicly acknowledged the regulatory intervention and stated its commitment to strengthening its compliance framework to meet governmental stipulations.
In an official statement, Upbit conveyed, “We fully recognize the financial authorities’ dedication to reinforcing anti-money laundering systems and enhancing compliance within the cryptocurrency sector. We are committed to undertaking the necessary actions to prevent future breaches.”
Despite the imposed suspension, it’s important to note that new users are still permitted to engage in trading activities on the platform. However, they are restricted from moving assets to or from external digital wallets, encompassing both deposit and withdrawal functionalities. Additionally, Upbit has hinted that the extent of these limitations may change in light of continuing discussions with regulatory agencies.
Growing Challenges for Upbit in the Crypto Market
Upbit’s suspension takes place in greater regulatory scrutiny in South Korea. The country is currently working to enact stricter laws that would regulate the cryptocurrency sector. Five months ago, the authorities initiated an antitrust investigation against Upbit, which added to the pressure. This paper examines potential monopolistic behaviors in the developing digital asset market in South Korea.
The recent brief service disruption of the exchange, resulting from an amazing 700,000 KYC infractions, worsened Upbit’s regulatory issues. This occurrence exacerbated the concerns raised by prior research showing 600,000 such comparable breaches.
These aggregated results prompted quick action by financial authorities against the trade, therefore indicating a further escalation of the national regulatory attack on the Bitcoin industry.
These most recent limitations are being introduced as South Korea prepares to unveil the second phase of its comprehensive cryptocurrency regulatory structure in the latter half of 2025. These forthcoming measures are integral to a wider governmental initiative aimed at establishing more robust oversight and elevated consumer protection standards within the rapidly evolving digital asset industry.
Also Read: South Korean Tax Service Is Investigating Upbit and Small Coin Issuers
The South Korean National Tax Service (NTS) is conducting a tax-related investigation into Upbit, the leading cryptocurrency exchange in the country. The investigation also includes the International Transaction Investigation Bureau of the Seoul Regional Tax Office. The investigation focuses on companies involved in overseas transactions and instances of “overseas tax evasion.” This is the second significant setback for Upbit, following the completion of an investigation into over 700,000 infractions linked to Know Your Customer (KYC). The investigation could lead to Upbit paying millions of dollars in fines…[Read More]
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