- South Korea’s FIU investigating Upbit for failing to confirm 500,000–600,000 accounts correctly.
- Upbit might face billions in fines for KYC violations beneath South Korea’s legal guidelines.
- The change’s license renewal is delayed because the FIU scrutinizes doable criminal activity.
South Korea’s Monetary Intelligence Unit (FIU) is probing cryptocurrency change Upbit for what could grow to be one of many largest Know Your Buyer (KYC) scandals within the historical past of the business.
The investigation centres on as much as 600,000 accounts that allegedly didn’t bear correct verification procedures.
These breaches had been uncovered throughout a routine evaluation of Upbit’s enterprise license renewal, which has now grow to be something however routine.
Accounts with out correct identification paperwork
The FIU’s in depth evaluation, which started in late August, uncovered severe flaws within the change’s account verification system. Authorities discovered that many accounts had been opened with unclear or improperly submitted identification paperwork.
In some circumstances, crucial particulars resembling names and registration numbers had been inconceivable to confirm.
South Korea mandates strict KYC checks to stop prison exercise, together with cash laundering, throughout the crypto market. With out correct identification verification, these accounts might have simply been exploited for illicit functions.
Upbit dangers penalties of as much as billions of gained
If the allegations are confirmed, Upbit, one of many 23 South Korean Exchanges that got here collectively for self-regulation in 2023, might face large penalties.
Beneath South Korea’s Particular Monetary Transaction Data Act, every violation might end in fines of as much as 100 million gained (roughly $75,000).
With probably 500,000 to 600,000 affected accounts based on native sources accustomed to the problem, the overall fines might soar into the billions of gained, marking a big blow to the change and the broader crypto business.
The fallout from these violations has already delayed Upbit’s license renewal course of indefinitely. Sometimes a routine process for crypto exchanges each three years, the evaluation is now mired in uncertainty because the FIU meticulously examines every flagged account for doable criminal activity.
Within the meantime, Upbit has remained tight-lipped in regards to the investigation, citing authorized restrictions on sharing particulars. Nonetheless, the corporate’s obscure statements have solely fueled considerations in regards to the severity of the breaches and whether or not they might be linked to cash laundering.
Because the investigation continues, the crypto world watches intently, awaiting the potential penalties of what might grow to be a landmark case in KYC and anti-money laundering enforcement.
