Upbit Could Face Billion-Dollar Fines for 700,000 KYC Violations as South Korea’s Regulator Nears Decision

Highlights:

• Upbit faces FSC sanctions for failing to verify over 700,000 customer identities.
• Regulators warn of heavy fines, possible suspension, or stricter compliance measures.
• Cryptocurrencies are coming under more scrutiny in South Korea, affecting exchanges and institutional trading policies.

The Financial Services Commission of South Korea (FSC) is expected to impose sanctions on Upbit, the biggest cryptocurrency exchange in the nation, for not verifying more than 700,000 customers, as reported by The Korean Times. Such breaches could draw fines of many billions of shillings, with the fines rising up to $68,600 per breach, as per the Special Financial Transactions Act in the country.

The Chairman of the Financial Services Commission, Kim Byoung-hwan, has assured the public that the review process would be over soon. This was in response to concerns raised by lawmaker Kim Jae-seop on potential delays. At a National Assembly session, he explained that the process has taken longer than expected because of several meetings to gather feedback from all stakeholders.

The speculation is also increasing that the exchange may suspend the exchange for some time, limit user registrations or have more compliance requirements. The FSC is set to announce its final decision soon, which will define the regulatory framework under which exchanges are to operate.

Byoung-hwan said:

“We are proceeding with the case quickly. Kim Byoung-hwan. We will conclude (the case) as soon as possible.”

South Korea Cracks Down on Upbit

Over 700k rule violations were discovered during a review of its business license renewal, as per the report. The exchange submitted its license renewal, which expired in October 2024. The regulator discovered between 500,000 and 700,000 instances of improper KYC verification and warned Upbit for violating KYC and AML regulations. Upbit’s parent company, Dunamu, has met with regulatory officials to present its case, but authorities remain resolute in their position. 

Upbit controls over 70% of South Korea’s cryptocurrency trading volume. Any regulatory action could significantly impact the country’s crypto market. Upbit is also under investigation for potential unfair market practices. Korean authorities are tightening cryptocurrency regulations, especially since the Virtual Asset User Protection Act was implemented in July last year.

Chairman of the South Korean Financial Services Commission: Upbit sanctions review is about to end

Kim Byung-hwan, chairman of the Financial Services Commission (FSC) of South Korea, announced that he would soon make a decision to sanction Upbit for violating customer verifica…

— Bpay News (@bpaynews) February 18, 2025

South Korea Tightens Crypto Regulations

South Korea’s financial watchdog has become stricter due to a troubled history in its cryptocurrency sector. In 2017, Bithumb experienced a security breach, compromising the accounts of 31,000 users. The upcoming ruling on Upbit will further demonstrate the authorities’ commitment to ensuring a more secure and regulated digital asset sector.

Alongside these developments, the Financial Services Commission has revealed plans to lift the ban on institutional cryptocurrency trading, a restriction that has been in place for nearly eight years. Under this new policy, publicly traded companies will be permitted to engage in digital asset trading on a trial basis starting in the second half of the year. The decision follows the third virtual asset committee meeting, where officials agreed to gradually let firms open real-name virtual asset accounts.