According to local media reports, Upbit, South Korea’s largest exchange, was shocked to have been ordered to suspend operations by the Korean Financial Services Union (FIU). The exchange is suspected of violating the HKMA’s customer identification system (KYC) and failing to perform anti-money laundering obligations. Specifically, the exchange will be restricted from opening new customer-related businesses during the business suspension period (up to 6 months). According to the (Specified Financial Transaction Information Act), violations of KYC related regulations can result in fines of up to 100 million won per transaction. The Crypto Clothing Cart (포장마차) channel revealed that Upbit has 500,000 to 600,000 KYC violations, and the specific amount may be equivalent to considerable.

Upbit, an exchange with 70% market share in South Korea, may suspend operations

News reports indicate that Upbit, South Korea’s largest virtual asset exchange, received a notice of business suspension due to suspected violations of the customer identification system (KYC) and failure to perform anti-money laundering obligations. The Financial Monetary Authority (FIU) under the Financial Commission notified on the 9th that it may implement sanctions mainly including business suspension. If the sanction is confirmed, Upbit will be restricted from new customers during the business suspension period (up to 6 months). business.

However, it is understood that the suspension period mainly restricts new customer registration, but existing users can still trade on Upbit. Upbit's current trading volume accounts for more than 70% of South Korea's virtual asset trading market. Upbit will submit a disciplinary opinion to the Hong Kong Monetary Authority before the 20th. The Hong Kong Monetary Authority plans to convene a sanctions review meeting on the 21st to finalize the sanction content such as the business suspension period.

The maximum fine for a single KYC violation is 100 million won, and Upbit may break the record

Reports indicate that Upbit has been subject to more severe sanctions than expected. It is understood that violations of KYC related regulations can result in fines of up to 100 million won per transaction. Business licenses for exchanges in South Korea are renewed every three years, and Upbit’s business license expired in October last year. At the end of August last year, the Hong Kong Monetary Authority began to inspect the business license renewal application submitted by Upbit. During the process, it was found that KYC was not performed correctly.

Transactions with undeclared overseas exchanges violate anti-money laundering rules

In addition, Upbit was also suspected of conducting transactions with undeclared overseas digital asset operators, and was also sanctioned under anti-money laundering rules. However, Upbit related personnel said that it is not easy to identify overseas undeclared exchanges on the blockchain in advance, and this matter is not untrue. On purpose. Dunamu, the parent company of Upbit, also stated that it would clarify the facts according to procedures and reiterated that the punishment will not affect old users.

The content of the sanctions was resolved on the 21st. Earlier cases were invalid due to unclear investigation.

The Crypto Clothing Cart (포장마차) channel stated that Upbit may have 500,000 to 600,000 KYC transactions that failed to comply with regulations, and the specific amount of fines may break a record. The channel also cited another exchange, Hanbitco, as an example, which violated KYC in 197 transactions and was fined 2 billion won ($1.37M). But the details still have to wait for the ruling on the 21st. Because in the case of Hanbitco, the court believed that the investigation was still unclear, so the ruling was invalid.

This article, Upbit, South Korea’s largest exchange, was involved in KYC and anti-laundering violations, suspending operations for up to half a year, and may impose record-breaking fines. First appeared on Lian News ABMedia.