• South Korea’s FIU investigating Upbit for failing to confirm 500,000–600,000 accounts correctly.
• Upbit might face billions in fines for KYC violations beneath South Korea’s legal guidelines.
• The alternate’s license renewal is delayed because the FIU scrutinizes attainable criminality.

South Korea’s Monetary Intelligence Unit (FIU) is probing cryptocurrency alternate Upbit for what could turn into one of many largest Know Your Buyer (KYC) scandals within the historical past of the trade.

The investigation centres on up to 600,000 accounts that allegedly did not endure correct verification procedures.

These breaches have been uncovered throughout a routine evaluation of Upbit’s enterprise license renewal, which has now turn into something however routine.

Accounts with out correct identification paperwork

The FIU’s in depth evaluation, which started in late August, uncovered critical flaws within the alternate’s account verification system. Authorities discovered that many accounts have been opened with unclear or improperly submitted identification paperwork.

In some circumstances, vital particulars reminiscent of names and registration numbers have been inconceivable to confirm.

South Korea mandates strict KYC checks to stop prison exercise, together with cash laundering, throughout the crypto market. With out correct id verification, these accounts might have simply been exploited for illicit functions.

Upbit dangers penalties of up to billions of gained

If the allegations are confirmed, Upbit, one of many 23 South Korean Exchanges that got here collectively for self-regulation in 2023, might face huge penalties.

Underneath South Korea’s Particular Monetary Transaction Info Act, every violation might end in fines of up to 100 million gained (roughly $75,000).

With probably 500,000 to 600,000 affected accounts in response to native sources conversant in the problem, the whole fines might soar into the billions of gained, marking a major blow to the alternate and the broader crypto trade.

The fallout from these violations has already delayed Upbit’s license renewal course of indefinitely. Usually a routine process for crypto exchanges each three years, the evaluation is now mired in uncertainty because the FIU meticulously examines every flagged account for attainable criminality.

Within the meantime, Upbit has remained tight-lipped concerning the investigation, citing authorized restrictions on sharing particulars. Nonetheless, the corporate’s imprecise statements have solely fueled considerations concerning the severity of the breaches and whether or not they may very well be linked to cash laundering.

Because the investigation continues, the crypto world watches carefully, awaiting the potential penalties of what might turn into a landmark case in KYC and anti-money laundering enforcement.