South Korea’s financial regulator has imposed a penalty on Upbit crypto exchange to suspend business operations for alleged anti-money laundering violations, especially in meeting know-your-customer obligations, local news outlet Maeil Business Newspaper reported Thursday.
The Financial Intelligence Unit, an agency under the country’s top financial regulator, reportedly notified Upbit on Jan. 9 of the penalty. Upbit has until next Monday to submit its opinion on the penalty to the FIU, with the final decision on the penalty expected the following day.
Once the penalty is finalized, Upbit, the largest crypto exchange in South Korea, could face restrictions in engaging in business with new customers for up to six months, Maeil reported.
The FIU reportedly conducted on-site inspections after Upbit filed an application to renew its business license in August. The agency found around 700,000 instances of suspected violations in know-your-customer obligations, according to local media reports at the time. Under South Korea’s Act of Reporting and Use of Specific Financial Information, Upbit could face fines of up to 100 million Korean won ($68,596) per violation.
The local news report said the FIU has taken issue with Upbit servicing overseas traders, as local regulations limit domestic exchanges to serving only real name-verified South Korean citizens.
Upbit’s business license reportedly expired in October last year, and its renewal application is still under review.
The cryptocurrency exchange, established in 2017, dominates the local crypto market with around 70% market share. According to The Block’s data dashboard, Upbit was the third largest centralized exchange in the world last month in terms of trade volume, processing over $283 billion worth of transactions.
The Block has reached out to the FIU and Upbit for further comments.
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