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South Korea’s largest cryptocurrency exchange, Upbit, is under scrutiny for significant customer identification (KYC) violations. According to blockchain journalist Wu Blockchain, units associated with the Financial Intelligence Unit (FIU) of South Korea have identified over 500,000 inappropriate identification documents during their investigations. This raises concerns regarding potential money laundering or other criminal activities.
Major Flaws Detected in Identification Verification
Since August, the FIU has conducted field examinations as part of Upbit’s license renewal application. These investigations revealed that the cryptocurrency exchange did not implement its KYC processes correctly. It was noted that identification documents submitted by users often contained blurred names or registration numbers, yet accounts were approved and opened regardless.
Accounts opened with such documents may leave room for involvement in criminal activities. FIU officials continue to thoroughly investigate each suspicious case. However, Upbit representatives stated that sharing information about the investigation process is not legally possible.
Potential Fines and License Revocation on the Table
According to South Korea’s Special Financial Information Act, cryptocurrency exchanges and platforms must renew their licenses every three years. KYC violations can jeopardize the renewal of this license. Additionally, violations of the law can result in fines of up to 1 billion Korean won for each occurrence.
Experts suggest that the high number of violations could increase the potential fines significantly. They also warn that this situation could have a substantial impact on the cryptocurrency market. The FIU’s final decision, based on detailed investigations, will be crucial for both Upbit and the future of the cryptocurrency sector.
