South Korean crypto giant Upbit is under fire for allegedly dropping the ball on Know Your Customer (KYC) compliance, potentially facing fines of $71,500 per infraction and complications with its business license renewal.
According to a report from Maeil Business Newspaper on Nov. 14, the Financial Intelligence Unit (FIU) of South Korea’s Financial Services Commission (FSC) flagged an eye-popping 500,000 to 600,000 potential KYC violations tied to the exchange.
The FIU reportedly uncovered these lapses during a review of Upbit’s license renewal, raising red flags about the exchange’s adherence to South Korea’s strict KYC and Anti-Money Laundering (AML) rules. Crypto platforms in the country are required to enforce rigorous verification processes, a mandate tightened in 2018 when South Korea restricted trading to real-name bank accounts.
One major allegation? Upbit allegedly let users set up accounts with obscured ID details—think blurred-out names and registration numbers—making proper identification nearly impossible.
Adding fuel to the fire is Upbit’s cozy relationship with K-Bank, its partner bank that’s also catching heat. Local authorities have scrutinized K-Bank for its crypto-heavy portfolio, with up to 70% of its deposits linked to digital assets. The situation isn’t helping K-Bank’s financial moves either; in October, the bank shelved a $732 million IPO over valuation and crypto dependency concerns.
Upbit’s woes extend beyond KYC issues. Last month, the FSC launched a monopoly probe into the exchange, spotlighting its dominance in South Korea’s crypto market. Founded in 2017, Upbit is a heavyweight, processing $2.2 billion in daily trades, according to CoinGecko.
While the investigations unfold, the pressure is mounting. If the allegations stick, it could be a costly and reputation-denting moment for Upbit as regulators clamp down on the crypto space.
