16.01.2025 14:47

South Korea's authorities have ordered the country's largest cryptocurrency exchange to suspend operations.\

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South Korea's Financial Intelligence Unit (FIU) has ordered Upbit, the country's largest cryptocurrency exchange, to halt operations due to alleged breaches of anti-money laundering (AML) regulations, according to the local publication Maeil Business Newspaper.

Founded in 2017, Upbit holds a dominant position in South Korea's cryptocurrency market, controlling around 70% of its trading volume. In December, the exchange became the world's third-largest centralized platform by trading volume, handling transactions worth over $283 billion.

On November 14, 2024, South Korea's regulatory body conducted an on-site inspection of Upbit to renew its license, which had expired in October. According to the FIU, the inspection uncovered approximately 700,000 instances of potential violations.

The regulator's claims are related to Upbit's failure to comply with Know Your Customer (KYC) procedures. Inspectors found that in thousands of cases, Upbit did not properly oversee the verification process — the names and registration numbers on active clients' documents were blurred.

Under South Korean law, each violation can result in a fine of up to 100 million won (approximately $67,000). Given the number of violations detected, the theoretical maximum fine could exceed $40 billion.

Upbit is required to submit its objections by January 20. The final decision on fines and sanctions will be made the following day. If the decision is upheld, the exchange could be barred from onboarding new clients for up to six months. It's reported that Upbit's license renewal application is still under review.

Previously, it was revealed that the cryptocurrency exchange BitMEX was fined an additional $100 million in the U.S., with the legal action also stemming from breaches of AML and KYC requirements.

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