South Korea’s Financial Intelligence Unit (FIU) has reportedly ordered Upbit, one of the country’s largest cryptocurrency exchanges, to halt operations for failing to comply with the Specific Financial Transaction Information Act.

The order, issued Jan. 9, prohibits Upbit from providing services to new users for up to six months. Existing users will continue to use the platform without restrictions. Upbit said the penalty, if imposed, would likely restrict new users from transferring cryptocurrency assets outside the exchange for a specific period.

While the order is unlikely to severely impact its operations, Upbit, which reportedly accounts for 70% of Korean trading volume, can still lodge an objection with the FIU by Jan. 20. The FIU is expected to hold a hearing on the matter the following day.

According to a local report, other South Korean cryptocurrency exchanges are closely following the FIU’s prospective enforcement action against Upbit, eager to learn its repercussions. As noted in the report, South Korea’s virtual asset industry is keenly following the development, which may impact Upbit’s next license renewal process.

During an on-site inspection conducted in August 2024, the FIU reportedly identified more than 700,000 instances where know-your-customer (KYC) processes were not properly handled. Some in Korea’s virtual asset industry are eager to learn the penalties the FIU is likely to impose. Under the Specific Financial Transaction Information Act, violations similar to those allegedly committed by Upbit are subject to a fine of up to $68,600 (100 million won).

Meanwhile, Upbit has vowed to utilize the available channels to challenge the FIU’s decision.

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