Upbit Exchange Investigated for Over 500,000 KYC Violations

SUMMARY

South Korea’s financial watchdog found Upbit approved hundreds of thousands of accounts without proper ID verification.
The exchange processed over $48.2 billion in crypto transactions in October.

Upbit, South Korea’s largest cryptocurrency exchange, is under investigation for allegedly violating know-your-customer (KYC) laws after discovering that over 500,000 user accounts were approved without the necessary verification. The Financial Services Commission (FSC), South Korea’s financial watchdog, identified the infractions during a review of Upbit’s license renewal. According to Maeil Business Newspaper, the exchange failed to implement proper KYC procedures for between 500,000 and 600,000 accounts. Some accounts were opened with blurred identification cards, while others lacked any verification.

Violating KYC regulations could lead to fines of up to 100 million won ($71,740) for Upbit. The exchange may also face difficulties renewing its operating license. These violations raise concerns about Upbit’s compliance with anti-money laundering (AML) standards, which have been under increasing global scrutiny in recent years.

Upbit remains a dominant player in the South Korean crypto market, handling over $7.7 billion in trade volume over the last 24 hours and more than $48.2 billion in crypto transactions during October. Despite the ongoing investigation, Upbit continues to serve a significant role in the ecosystem, maintaining its position as the fifth-largest exchange globally, according to CoinMarketCap.

The investigation comes as the FSC increases its scrutiny of the South Korean crypto market. FSC Chairman Kim Byung-hwan previously stated his intentions to investigate the monopolistic structure of the nation’s crypto exchanges. With Upbit’s significant market share, the exchange is at the center of this regulatory examination, which reflects the government’s growing focus on transparency and compliance within the rapidly expanding digital asset sector.

The outcome of this investigation will have implications for both Upbit’s operations and South Korea’s broader crypto regulatory framework. As of now, the FSC has not disclosed additional details regarding the probe, and Upbit has not issued a public statement. The investigation continues, with potential regulatory changes on the horizon that could affect the entire South Korean crypto industry.

This growing regulatory focus highlights the need for exchanges to maintain rigorous compliance with KYC and AML standards as governments worldwide tighten oversight of digital asset markets. Upbit’s future will depend on the findings of this probe and its ability to meet these regulatory requirements.