A South Korean court temporarily lifted a partial business halt on Crypto Exchange Upbit, which had for three months banned its trading platform from providing services to new clients.
On February 25, the South Korean Financial Information Unit (FIU) approved the exchange and imposed a three-month ban on depositing and withdrawing new clients. The FIU previously said the outage corresponded to a violation of Upbit’s policy. This prohibits exchanging transactions with unregistered virtual asset service providers (VASPs).
In response to FIU sanctions, Upbit’s parent company Dunamu filed a lawsuit against FIU, attempting to overturn the partial suspension order. Additionally, Dunamu requested an injunction to temporarily lift the suspension order.
On March 27, local media Newsis reported that the court granted the injunction and moved the suspension order 30 days after reaching the court’s ruling. This allows Upbit to serve new clients while legal battles continue.
Upbit investigation resulted in a 3 month suspension order
Established in 2017, Upbit is Korea’s largest crypto exchange. On October 10, the country’s Financial Services Commission (FSC) began an investigation into UPBIT’s potential violations of the country’s anti-Monopoly law.
In addition to anti-Monopoly violations, the exchange is suspected of violating a violation that knows your customer’s (KYC) rules. On November 15th, FIU identified at least 500,000-600,000 potential KYC violations. Regulators have discovered alleged violations while considering renewing the exchange’s business license.
In 2018, South Korean regulators ended anonymous crypto transactions for citizens. With the new development, users must pass the KYC procedure before being allowed to trade digital assets on crypto trading platforms such as Upbit.
Apart from these allegations, FIU accused Upbit of promoting 45,000 transactions on unregistered foreign crypto exchanges. This violates national laws regarding the reporting and use of designated financial transaction information.
Related: South Korea plans to regulate cross-border Stablecoin transactions
South Korea cracks down on overseas exchanges
On October 25, 2024, South Korea strengthened its monitoring of cross-border cryptocurrency transactions. Choi Sang-mok, the country’s finance minister, said the government will introduce reporting delegations to companies that handle cross-border transactions with digital assets.
It aims to promote preemptive surveillance of crypto transactions “used for tax evasion and currency manipulation.”
In line with the rules, South Korea’s Google Play has blocked applications for 17 crypto exchanges in response to FIU requests. FIU also said it works to restrict exchange access using the Internet and Apple’s App Store.
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