Upbit Faces Heat: 600K KYC Breaches Under Investigation

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Crypto Giant Upbit Faces Heat: 600K KYC Breaches Under Investigation

Written by Aaron S.,

Editor-In-Chief

Last Updated: November 18, 2024

Key Takeaways

Upbit is under investigation for 500,000–600,000 alleged breaches of KYC protocols during license renewal checks;
South Korea enforces strict KYC and AML requirements, including real-name bank account linkage for crypto trading;
Upbit could face significant financial penalties and challenges renewing its business license if violations are confirmed.

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Crypto Giant Upbit Faces Heat: 600K KYC Breaches Under Investigation

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Authorities in South Korea are scrutinizing the cryptocurrency exchange Upbit $1.11B for reportedly bypassing extensive Know Your Customer (KYC) protocols.

According to a report from Maeil Business Newspaper (MK) dated November 14, the Financial Intelligence Unit (FIU), a subdivision of the Financial Services Commission (FSC), has flagged between 500,000 and 600,000 potential breaches of KYC regulations by Upbit.

South Korean legislation requires all virtual asset service providers (VASPs), including cryptocurrency exchanges, to adhere to rigorous KYC standards. This mandate, first introduced in January 2018, aims to cut illegal activities in the crypto space by linking transactions to verified, real-name bank accounts.

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Following this initiative, the FSC further tightened regulations with a compulsory exchange registration system, ensuring alignment with KYC and Anti-Money Laundering (AML) measures.

The FIU's investigation into Upbit reportedly uncovered numerous instances of insufficient user verification. One notable example involved the platform permitting account creation using obscured identification documents, where critical details such as names and registration numbers were either illegible or partially concealed.

These allegations could lead to steep financial penalties for Upbit. Reports suggest that each infraction may incur a fine of 100 million Korean won (approximately $71,500). Beyond monetary repercussions, the alleged violations may jeopardize the renewal of Upbit's operating license, posing a threat to its continued operations within the country.

By reinforcing these rules, South Korean authorities aim to create a transparent and secure crypto trading environment, holding exchanges accountable for preventing fraudulent or illicit activities.

In other news, a $232 million crypto scam has rocked South Korea, leading to the arrest of a well-known influencer and 215 others. What are the details of this scam? Read the full story.