Upbit’s KYC Scandal: Will South Korea’s Tough New Rules Bring the Giant Down?

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  • On January 21, South Korea’s FIU will review Upbit’s KYC violations.
  • South Korea increases crypto rules, focusing on KYC and client safety.

On January 21, 2025, South Korea’s largest cryptocurrency exchange, Upbit, will attend a disciplinary hearing due to alleged violations in its customer verification processes. The Financial Intelligence Unit of South Korea has been investigating these infractions since August 2024, which are believed to be connected to Know-Your-Customer regulations.

During a review conducted when Upbit’s VASP license was due for renewal, inspectors from the Financial Intelligence Unit discovered over 500,000 instances where customers submitted fraudulent or incomplete identification documents. Notably, some of these documents bore both names and registration numbers, but they were either blurry or concealed, casting suspicion on the authenticity of Upbit’s verification process.

South Korea Tightens Cryptocurrency Regulation

For the first time, FIU is planning to construct a sanctions review using data from a Virtual Asset Service Provider’s renewal inspection. If Upbit falls short of the established standards, they could face penalties worth up to 100 million Korean won (approximately $71,500) per violation. This could potentially impact Upbit’s operating license in Korea as well.

At present, South Korea is enhancing its comprehensive regulatory efforts aimed at refining crypto currency regulations. The Financial Services Commission (FSC) has initiated talks on the second stage of crypto regulations focusing on stablecoins and consumer protection. Additionally, they have been in contact with nations such as the United States and Japan to address security concerns, many of which are linked to hacking incidents that can originate from North Korea.

The decision from Upbit’s disciplinary hearing could create waves in the South Korean cryptocurrency sector and potentially impact the exchange’s overall functioning. As the Financial Intelligence Unit notes, there has been growing scrutiny on cryptocurrency trading platforms as they strive to adhere to anti-money laundering regulations without compromising market integrity.

Recently, the cryptocurrency sector has faced challenging times due to increased scrutiny by regulatory bodies. This ongoing case serves as a relevant warning about the importance of adhering strictly to regulations and facing potential penalties if one fails to meet rigorous legal requirements.

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2025-01-17 12:58