- South Korea's FIU is investigating Upbit for failing to correctly confirm 500,000 to 600,000 accounts.
- Upbit may face billions in fines for KYC violations beneath South Korean legal guidelines.
- Renewal of the change's license is delayed because the FIU examines doable unlawful actions.
South Korea's Monetary Intelligence Unit (FIU) is investigating cryptocurrency change Upbit for what may turn into one of many greatest Know Your Buyer (KYC) scandals within the trade's historical past.
The investigation entails almost 600,000 accounts that won’t have been topic to correct verification procedures.
These violations had been found throughout a routine evaluate of Upbit's enterprise license renewal, which has now turn into something however routine.
Accounts with out correct identification
The FIU's in-depth evaluate, which started in late August, revealed critical flaws within the change's account verification system. Authorities discovered that many accounts had been opened with unclear or incorrectly submitted identification paperwork.
In some circumstances, essential particulars reminiscent of names and registration numbers had been not possible to confirm.
South Korea imposes strict KYC checks to stop felony actions, together with cash laundering, within the crypto market. With out correct id verification, these accounts may have simply been exploited for illicit functions.
Upbit faces sanctions of as much as billions of gained
If the allegations are confirmed, Upbit, certainly one of 23 South Korean exchanges which have come collectively to self-regulate in 2023, may face large sanctions.
Underneath South Korea's Monetary Transaction Particular Data Act, every violation may lead to fines of as much as 100 million gained (about $75,000).
With between 500,000 and 600,000 accounts probably affected, in keeping with native sources conversant in the matter, the entire fines may attain a number of billion gained, dealing a serious blow to the change and the crypto trade as a complete .
The results of those violations have already delayed Upbit's license renewal course of indefinitely. Usually a routine process for crypto exchanges each three years, the evaluate is now mired in uncertainty because the FIU meticulously critiques each account flagged for doable criminality.
Within the meantime, Upbit has remained tight-lipped concerning the investigation, citing authorized restrictions on sharing particulars. Nevertheless, the corporate's obscure statements have solely fueled issues concerning the severity of the violations and whether or not they could possibly be linked to cash laundering.
Because the investigation continues, the crypto world is watching intently, awaiting the potential penalties of what may turn into a landmark KYC and anti-money laundering case.
