South Korea Hits Upbit with Partial Suspension Over Compliance Breach

South Korea’s largest cryptocurrency exchange, Upbit, has been slapped with a three-month partial business suspension by the country’s Financial Intelligence Unit (FIU), temporarily restricting new customer transactions. The regulatory action, announced on February 25, prohibits new users from making crypto deposits or withdrawals.

The FIU cited Upbit’s failure to comply with regulations barring transactions with unregistered crypto asset service providers (CASPs) as the primary reason for the penalty. While the exchange remains operational for existing users, the sanctions highlight the increasing scrutiny South Korean regulators are placing on crypto platforms.

Upbit publicly acknowledged the restrictions in a statement on its website, apologizing for any inconvenience caused to its users.

Upbit Pushes for Possible Revisions to Sanctions

In its official response, Upbit explained that the FIU’s sanctions were based on findings from on-site inspections conducted earlier in 2024. The exchange asserted that it had already taken corrective measures in accordance with financial authorities’ requirements.

“Upbit has reviewed the necessary improvements made in response to this sanction by the financial authorities and completed the measures,” the company stated.

However, Upbit suggested that certain factors might not have been fully considered in the regulator’s decision. The exchange hinted at the possibility of amendments to the sanctions.

“The sanctions imposed this time may be subject to change through procedures in accordance with relevant regulations, and if the effect of the relevant measures is suspended or terminated, new members will also be able to use Upbit’s services without restrictions,” it stated. Upbit also assured users that it would keep them updated on any developments regarding potential regulatory revisions.

Existing Users Unaffected

Despite the restrictions on new user transactions, Upbit clarified that existing customers can continue to use all of its services without disruption. The exchange’s current users retain full access to trading, deposits, and withdrawals.

The regulatory crackdown on Upbit comes as South Korea intensifies its oversight of cryptocurrency exchanges, enforcing strict compliance measures to curb illicit financial activities. The suspension signals that even major players in the industry are not immune to regulatory enforcement.