South Korea’s top financial regulator, the Financial Services Commission (FSC), is preparing to impose heavy sanctions on Upbit, the nation’s largest cryptocurrency exchange, over extensive violations of Know Your Customer (KYC) regulations . An ongoing investigation has revealed over 700,000 breaches, placing Upbit at the center of intensifying regulatory scrutiny. Regulatory Pressure Mounts on Upbit According to reports, the FSC’s probe, launched in November 2024, accuses Upbit of failing to properly verify customer identities, a critical measure set aside to protect users against financial crimes. The exchange is also suspected of facilitating transactions with unlicensed platforms, further heightening regulatory concerns. In response, the FSC has proposed significant penalties, with fines potentially reaching tens of billions of won. Under the Special Financial Transactions Act, each violation could cost Upbit up to $68,600 Similarly, the exchange also had a disciplinary hearing in 2024 to ascertain its compliance with regulatory guidelines on Know-Your-Customer (KYC) provisions. According to the FIU, the sanctions review meeting was to evaluate over 500,000 suspected KYC violations it spotted while performing on-site inspection. Meanwhile, the Korean Times has reported growing speculation that the FSC may impose operational restrictions, including temporary suspensions or limits on new user registrations. These measures could disrupt South Korea’s crypto trading ecosystem, as Upbit handles more than 80% of the country’s digital asset transactions. Ripple Effects Across the Crypto Industry The crackdown on Upbit is sending shockwaves through the country’s broader crypto industry. For example, other major exchanges, including Korbit, GOPAX, Bithumb, and Coinone, have already been subjected to on-site inspections, signaling a wider regulatory sweep. One industry official expressed concern: “If a major player like Upbit faces sanctions, smaller virtual asset exchanges will inevitably feel even greater pressure.” This heightened regulatory pressure follows the implementation of South Korea’s new Virtual Asset User Protection Act, which took effect in July 2024 and reinforced stricter oversight across the sector. Upbit’s Compliance History and Future Uncertainty Despite the current allegations, Upbit has long been regarded as a leader in compliance. In 2021, it was the first exchange to register under South Korea’s revamped regulatory framework and pioneered real name verification for crypto transactions. However, its latest legal troubles mark a shift toward even stricter enforcement. As Upbit’s parent company, Dunamu, continues discussions with regulators, the FSC’s final decision will determine Upbit’s future and reshape compliance expectations across the industry. Despite the ongoing scrutiny, South Korean banks have continued their partnerships with Upbit. The post South Korea’s FSC Targets Upbit in Major Crypto Crackdown appeared first on TheCoinrise.com .
