South Korea’s FIU to Fine Upbit Over 600,000 Suspected KYC Violations

South Korea’s largest cryptocurrency exchange, upbit upbit - cs@upbit.com Centralised Exchange , is facing a disciplinary hearing by the Financial Intelligence Unit (FIU) over alleged Know Your Customer (KYC) violations. This regulatory action could have significant consequences for the exchange and the country’s cryptocurrency industry.

What Is the FIU Investigating?

The FIU, part of South Korea’s Financial Services Commission, has scheduled a sanctions review committee for Upbit on January 21. The hearing will evaluate potential penalties and actions against Upbit’s executives and employees, following findings from an on-site inspection tied to the renewal of the exchange’s Virtual Asset Service Provider (VASP) registration.

This marks the first sanctions-level review resulting from inspections under the updated VASP compliance framework.

Alleged KYC Violations

The FIU began inspecting Upbit in late August and discovered between 500,000 and 600,000 cases of suspected KYC violations. These cases involve accounts created with unclear or blurry ID documents, which made it difficult to verify names and registration numbers.

While it is not yet confirmed whether these cases are actual KYC breaches, the FIU will determine penalties based on Upbit’s explanation. A key concern is whether these violations could be linked to money laundering activities.

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South Korea’s Crypto Regulations

Beyond the Upbit investigation, South Korea is taking broader steps to strengthen cryptocurrency regulations. The Financial Services Commission (FSC) plans to enforce stricter rules, including mandatory information disclosures for listed virtual assets and tighter requirements for stablecoin reserve issuers.

These initiatives were announced during a recent Virtual Asset Committee meeting, with legislative proposals expected later this year. The FSC aims to finalize the regulations in the second half of 2025.

The proposed measures are designed to align South Korea’s cryptocurrency regulations with global standards. They also aim to create a more transparent market and provide better protection for investors.