In a significant regulatory move, South Korea’s Financial Intelligence Unit (FIU) has imposed a three-month restriction on Upbit, one of the country’s leading cryptocurrency exchanges. The sanction, announced on February 25, 2025, prohibits Upbit from onboarding new customers and processing crypto deposits and withdrawals for new accounts.
The FIU’s decision comes in response to Upbit’s alleged violations of South Korean policies that forbid exchanges from facilitating transactions with unregistered crypto asset service providers (CASPs). This partial business suspension is the result of on-site inspections conducted by the authority in 2024.
Upbit failed to properly implement Know Your Customer (KYC) procedures for approximately 700,000 accounts. Many ID documents featured blurred and unrecognizable pictures of customers.
The exchange violated South Korean policies prohibiting transactions with unregistered crypto asset service providers (CASPs). Upbit failed to comply with anti-money laundering (AML) obligations as required by the Specific Financial Transaction Information Act.
The violations were discovered during Upbit’s business license renewal process in October 2024. These lapses contravene the Virtual Asset User Protection Act enacted in July 2024, which mandates strict measures to prevent money laundering and terrorist financing.
Upbit has publicly addressed the situation, acknowledging the sanctions on its website and apologizing to customers for any inconvenience. The exchange emphasized that existing users can continue to access all services without interruption.
In its statement, Upbit noted that it has already implemented necessary improvements in response to the FIU’s findings. However, the company also suggested that the scope of sanctions might be subject to change, stating that “specific facts and circumstances” may not have been fully considered.
The exchange expressed optimism about potential amendments to the sanctions, indicating that if the measures are suspended or terminated, new members would be able to use Upbit’s services without restrictions. Upbit has committed to providing updates if any agreement is reached with authorities regarding modifications to the current sanctions.
This regulatory action against Upbit underscores the increasing scrutiny of cryptocurrency exchanges in South Korea and reflects the ongoing efforts to ensure compliance with national financial regulations in the rapidly evolving crypto landscape.
Angel Marinov is the Managing Editor at Coinlabz. With extensive knowledge of crypto payments and blockchain use cases, Angel is a trusted source of accurate and timely information
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