A court in South Korea has temporarily lifted the partial suspension placed on the cryptocurrency exchange Upbit, which had barred the platform from onboarding new clients for a duration of three months.
On February 25, South Korea’s Financial Intelligence Unit (FIU) imposed sanctions on the exchange, instituting a three-month prohibition on deposits and withdrawals for new users. This enforcement was due to Upbit’s infractions related to regulations that forbid exchanges from engaging with unregistered virtual asset service providers (VASPs).
In response to these sanctions, Dunamu, Upbit’s parent company, initiated legal proceedings against the FIU to contest the partial suspension. Additionally, Dunamu sought a temporary injunction to lift the ban.
As of March 27, local media outlet Newsis reported that the court granted the request for an injunction, allowing the suspension to be put on hold for 30 days post-court judgment. This ruling enables Upbit to continue servicing new clients while the dispute unfolds in the legal arena.
### Upbit Investigations Result in Suspension
Launched in 2017, Upbit stands as the largest cryptocurrency exchange in South Korea. On October 10, the Financial Services Commission (FSC) began probing Upbit for possible infringements of the nation’s anti-monopoly regulations.
Alongside allegations of anti-monopoly violations, the exchange is also under suspicion for failing to adhere to Know Your Customer (KYC) requirements. On November 15, the FIU pointed out between 500,000 and 600,000 potential KYC breaches by the exchange, which were detected during the assessment of Upbit’s business license renewal.
Since 2018, South Korean regulators have prohibited anonymous cryptocurrency trading for its citizens. Consequently, users are now mandated to complete KYC procedures before being permitted to trade digital assets on platforms such as Upbit.
Additionally, the FIU has accused Upbit of facilitating 45,000 transactions with unregistered foreign crypto exchanges, contravening the country’s Act on Reporting and Using Specified Financial Transaction Information.
### South Korea Tightens Oversight on Foreign Exchanges
On October 25, 2024, South Korea augmented its regulation of cross-border cryptocurrency transactions. Finance Minister Choi Sang-Mok announced that the government intends to implement a reporting requirement for enterprises engaging in cross-border digital asset transactions.
This initiative aims to enhance proactive monitoring of cryptocurrency transactions that may be used for tax evasion and currency manipulation.
In accordance with these regulations, South Korea’s Google Play has blocked the apps of 17 cryptocurrency exchanges upon the FIU’s request. The agency is also striving to limit exchange access through the internet and Apple’s App Store.