Upbit Faces 3-Month Suspension After KYC and AML Violations by South Korean Authorities

South Korea Suspends Upbit’s New Customer Transactions Over Regulatory Breaches

Upbit, South Korea’s largest cryptocurrency exchange, has been handed a three-month business suspension following an investigation by the Korea Financial Intelligence Unit (FIU) that uncovered widespread anti-money laundering (AML) failures.

The suspension, effective from 7 March to 6 July 2025, restricts new customers from transferring crypto assets, while existing users can continue trading without limitations.

Investigation Uncovers Thousands of AML Violations

The FIU, operating under the Financial Services Commission (FSC), conducted two on-site inspections at Upbit’s parent company, Dunamu, between August and October 2024.

The investigation revealed 44,948 cryptocurrency transactions facilitated for 19 unregistered overseas crypto service providers, violating regulatory compliance.

Further scrutiny found significant lapses in customer verification procedures.

The FIU reported 34,777 instances where Upbit accepted blurry or out-of-focus ID images, marking them as verified.

Another 5,785 cases involved users providing incomplete or incorrect addresses, some left blank or containing unrelated details.

Despite these discrepancies, Upbit approved their registrations, breaching South Korea’s strict Know Your Customer (KYC) policies.

Disciplinary Actions Target Dunamu Leadership

As part of the regulatory crackdown, Dunamu’s CEO, Lee Sirgoo, received a formal reprimand.

Lee Sirgoo is currently serving his third term as the CEO of Dunamu, which will run until 2026.

Additionally, two employees—including a compliance officer—were dismissed.

Five team leaders were issued formal warnings, while two others received cautionary notices.

The FIU is also preparing to impose financial penalties, with a final decision expected after further deliberation by the FIU Sanctions Committee.

Upbit Responds, Hints at Possible Amendments to Sanctions

Following the FIU’s announcement on 25 February, Upbit acknowledged the sanctions, assuring customers it had “reviewed the necessary improvements” to address the concerns raised by financial authorities.

The exchange also suggested that some aspects of the penalties might be revised.

In the official statement, Upbit wrote,

“The sanctions imposed this time may be subject to change through procedures in accordance with relevant regulations. If the effect of the relevant measures is suspended or terminated, new members will also be able to use Upbit’s services without restrictions.”

Trading Volumes Plummet as Uncertainty Grows

The regulatory scrutiny has already taken a toll on Upbit’s business.

Since January, the exchange’s daily trading volume has plunged by approximately 70%, now standing at $4.6 billion, according to CoinGecko data.

Founded in 2017, Upbit has grown into South Korea’s dominant crypto trading platform and currently ranks as the world’s 23rd-largest exchange by trust score.

However, with increased regulatory pressure and uncertainty surrounding the extent of the FIU’s final penalties, the platform faces a critical period in the months ahead.