- South Korea's FIU is investigating Upbit for failing to correctly confirm 500,000-600,000 accounts.
- Upbit might face billions in fines for KYC violations below South Korean regulation.
- Renewal of the alternate's license is delayed because the FIU investigates potential criminal activity.
South Korea's Monetary Intelligence Unit (FIU) is investigating cryptocurrency alternate Upbit over what might change into one of many largest Know Your Buyer (KYC) scandals within the trade's historical past.
The investigation focuses on as much as 600,000 accounts that allegedly didn’t cross correct verification.
These violations had been found throughout a routine overview of Upbit's enterprise license renewal, which has now change into something however routine.
Accounts with out correct identification paperwork
A big-scale FIU audit that started in late August revealed critical flaws within the alternate's account verification system. Authorities discovered that many accounts had been opened with unclear or incorrectly submitted identification paperwork.
In some circumstances, crucial particulars corresponding to names and registration numbers couldn’t be verified.
South Korea mandates strict KYC controls to forestall prison exercise, together with cash laundering, within the crypto market. With out correct identification verification, these accounts might simply be misused for unlawful functions.
Upbit dangers penalties of as much as billions of received
If the allegations are confirmed, Upbit, one among 23 South Korean exchanges which have come collectively for self-regulation in 2023, might face large sanctions.
Underneath South Korea's Particular Data on Monetary Transactions Act, every violation can lead to a fantastic of as much as 100 million received (roughly $75,000).
With doubtlessly 500,000 to 600,000 accounts affected, based on native sources aware of the matter, whole fines might attain billions of received, dealing 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 overview is now mired in uncertainty because the FIU rigorously scrutinizes every flagged account for potential criminal activity.
Upbit, in the meantime, remained tight-lipped concerning the investigation, citing authorized restrictions on sharing particulars. Nonetheless, the corporate's obscure statements solely fueled considerations concerning the seriousness of the breach and whether or not it may very well be linked to cash laundering.
Because the investigation continues, the crypto world is watching intently and awaiting the potential fallout from what might change into a landmark case in KYC and anti-money laundering enforcement.
