Key Notes

Key Notes:

Upbit is under scrutiny for failing to verify over 700,000 customer identities, raising concerns over money laundering risks.Upbit’s market dominance means any regulatory actions could significantly affect South Korea’s cryptocurrency sector.Kim Byoung-hwan confirmed that the case is progressing quickly and will be resolved promptly.

The Financial Services Commission in South Korea is going to decide what punishment Upbit, the largest cryptocurrency exchange in the country, will face following a discovery that the exchange failed to properly verify customer identities in over 700,000 cases. This has raised serious concerns about potential money laundering risks.

Upbit’s violation of the country’s Special Financial Transactions Act could result in financial penalties or business suspension for up to six months. Kim Byoung-hwan, governor of the Financial Services Commission, stated during a parliamentary session that the case is moving forward swiftly and will be resolved without delay. He said:

“We are proceeding with the case quickly. Kim Byoung-hwan. We will conclude (the case) as soon as possible.”

The exchange dominates more than 70% of local cryptocurrency trading volume in South Korea; hence, the impact of any regulatory action could affect the country’s cryptocurrency market.

In addition to this, Upbit is also being investigated for possible unfair market practices. This is happening while South Korean officials are making stricter rules for cryptocurrencies, especially since the Virtual Asset User Protection Act started in July 2024.

South Korea’s financial watchdog became stricter following a troubled history in its cryptocurrency sector. Bithumb, in 2017, had a security breach that resulted in the accounts of 31,000 users being compromised. The forthcoming ruling on Upbit will further prove the authorities’ commitment to having a more secure and regulated digital asset sector.

The outcome of this case could also, in a way, impact how crypto trading platforms operate in the country, forcing other exchanges to comply with the necessary regulatory framework across the industry.

Recently, the country’s top financial watchdog lifted a seven-year restriction on institutional crypto investments. This new policy allows publicly traded companies to engage in digital asset trading on a trial basis in the latter half of the year. The decision came after the regulator’s third virtual asset committee meeting, where officials agreed to gradually expand institutional access by enabling firms to establish real-name virtual asset accounts over time.

At present, only individual investors with verified accounts can enter the crypto market. As an initial step, the FSC plans to allow non-profit entities to trade cryptocurrencies and will collaborate with the Digital Asset Committee, a policy advisory body under its supervision. It was added that a pilot program will be created, allowing 3,500 approved companies to open real-name accounts for investing in blockchain projects.

Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.

Temitope is a writer with more than four years of experience writing across various niches. He has a special interest in the fintech and blockchain spaces and enjoy writing articles in those areas. He holds bachelor’s and master’s degrees in linguistics. When not writing, he trades forex and plays video games.

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