Upbit Faces Major Scrutiny Over KYC Violations, Potential Fines Loom

South Korea's Financial Intelligence Unit (FIU) has uncovered up to 600,000 suspected violations of Know Your Customer (KYC) regulations at Upbit, the country’s largest cryptocurrency exchange.

The investigation, part of a review for Upbit’s business license renewal, revealed lapses in customer verification, including approvals of accounts with incomplete or unclear identification documents. This raises concerns about potential money laundering risks.

The exchange faces potential fines of up to 100 million won per violation, though it has yet to comment on the matter. Upbit has been under scrutiny for years due to its market dominance and its role in triggering significant price fluctuations with new token listings.

Recently, tokens like Uniswap (UNI) and Cat in a Dogs World (MEW) saw massive volume spikes after being listed on Upbit, leading to concerns over “pump and dump” schemes.

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In response to increasing regulatory pressures, Upbit has taken steps to improve transparency, including a public disclosure under South Korea’s new Virtual Asset User Protection Act.

It has also secured a Digital Payment Token Services License from Singapore’s Monetary Authority, reflecting its commitment to global compliance. However, the FIU’s findings could have serious domestic and international implications for Upbit, including hefty fines and damage to its reputation.

Kostadin Dimitrov