Upbit Breaches KYC Regulations, May Face Fines Up to $71.7K

Upbit, South Korea’s largest crypto exchange, has reportedly violated Know Your Customer (KYC) regulations by neglecting to conduct proper identification and verification procedures for approximately 600,000 accounts. According to a local news report, South Korea’s Financial Services Commission (FSC) identified the breach during the exchange’s license renewal review. This violation could lead to fines of up to $71.7k and may cause complications in the platform’s license renewal process.

The country’s FSC found that many users opened accounts submitting blurred or unrecognizable identification cards. There were even accounts that were opened without proper verification. Both the watchdog and the exchange remain reluctant to disclose further details on the matter.

While Upbit ranks one in the South Korean crypto trading platform, the exchange secures the fifth position globally. Over the past 24 hours, the exchange processed over $7.7 billion in trading volume, recording $48.2 billion in October alone, according to CoinMarketCap.

However, Upbit faces increased scrutiny, especially due to South Korea’s strengthened crypto regulating policies. Over the past few months, South Korea has garnered global attention driven by its strategic moves to foster crypto expansion and tackle growing threats. The country’s first investor protection act, enacted in July 2024, signifies the government’s priority over customers’ security.

Amidst the ongoing regulatory moves, FSC Chair Kim Byung-hwan highlighted Upbit’s overwhelming dominance in South Korea’s cryptocurrency market. The recent compliance issue will likely prompt even closer scrutiny and stricter regulatory oversight of the exchange.  

In a recent development, South Korean police detained 215 individuals, including a prominent YouTuber, for orchestrating a massive $228.4 million crypto scam. Led by the Gyeonggi Southern Provincial Police Agency’s Anti-Corruption and Economic Crime Investigation Unit, South Korea probed into the scam as part of the country’s wider crypto regulatory moves. Reportedly, the group lured customers into investing in a fake crypto platform, offering fake promises of huge returns.