😈 Dunamu, the parent company of South Korea’s largest cryptocurrency exchange, Upbit, has taken the Financial Intelligence Unit (FIU) to court. Why, you ask? Well, it seems the FIU imposed some sanctions on Upbit, and Dunamu isn’t too happy about it. 💼
On February 27, Dunamu filed a lawsuit against the FIU, a division under the Financial Services Commission (FSC), in the Seoul Administrative Court. They’re seeking to overturn the FIU’s partial business suspension order. They’ve also applied for an injunction to halt the enforcement of the sanctions. 🚫
The FIU partially suspended Upbit’s operations, restricting the exchange from processing external crypto transactions for new customers. Services for existing customers remain unaffected. 😮
In addition to the suspension, the FIU also imposed disciplinary measures against Upbit and its executives for violating local regulations. A total of nine executives, including the CEO, faced disciplinary actions. The CEO received a formal reprimand, while the company’s compliance officer became the first compliance officer at a South Korean crypto exchange to be dismissed by regulators. 👮♂️
Upbit’s Monopoly Suspicions and the Partial Business Ban
Founded in 2017, Upbit is South Korea’s largest cryptocurrency exchange. In October 2024, during a parliamentary audit, the FSC faced scrutiny over its plans to investigate potential anti-monopoly violations by Upbit. 📈
The FIU announced in November that it had identified at least 500,00 violations related to Know Your Customer (KYC) compliance at Upbit. This was followed by a business suspension notice in January 2025. 🚨
Upbit’s Alleged KYC Violations and Suspicious Transactions
The FIU accused Upbit of facilitating approximately 45,000 transactions with unregistered foreign crypto exchanges, which it claims is a violation of the Act on Reporting and Using Specified Financial Transaction Information. 💸
Regulators also identified serious deficiencies in Upbit’s customer verification processes, such as accepting photocopied ID cards instead of originals and approving submissions with key identification details obscured. 😱
In cases where customers submitted driving licenses for verification, the FIU found nearly 190,000 instances where checks were conducted solely based on personal information without verifying the authenticity of the card using the encrypted serial number found on South Korean driving licenses. During customer re-verification, the probe identified over 9 million cases where no official identification documents were collected. 🚨
During a test of Upbit’s customer verification system, a subcontractor handling Dunamu’s KYC operations hand-drew an ID card as part of the test. The system verified it as a legitimate ID. However, since this was conducted for system testing purposes, the FIU did not classify it as a regulatory violation. 😜
Responding to the restriction, Upbit said in a statement that it has reviewed the necessary improvements and has completed the necessary corrective measures. 📝
“However, we believe that certain circumstances and details regarding the reasons for some of the sanctions and their severity were not fully considered. Therefore, we will faithfully present these points through the procedures stipulated by the relevant regulations,” Upbit said.
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2025-02-28 16:49