Upbit Hit with Partial Suspension Over Regulatory Violations in South Korea

In Brief:

Upbit faces a three-month partial suspension over compliance violations.

Authorities accuse the exchange of engaging with unregistered entities and failing customer verification checks.

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South Korea's largest crypto exchange by trading volume, Upbit, has been sanctioned by regulators for failing to comply with anti-money laundering (AML) and customer verification rules. As a result, the exchange faces a partial suspension of operations from March 7 to June 6, 2025.

The restrictions will prevent new customers from transferring virtual assets, but existing users can continue trading as usual. Authorities also imposed financial penalties and personnel actions against Upbit's parent company, Dunamu.

Regulatory Crackdown Intensifies

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The suspension follows months of increasing scrutiny on Upbit. South Korea's financial watchdogs launched an antitrust investigation into the exchange five months ago and flagged over 700,000 KYC violations in previous reports.

Upbit acknowledged the violations and vowed to enhance compliance measures. The exchange stated that it would implement stricter transaction monitoring and ensure full adherence to the Virtual Asset User Protection Act.

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Impact on the Crypto Market

Despite the suspension, Upbit remains a dominant player in South Korea’s crypto market, where over 30% of the population actively invests in digital assets. However, the government's stricter stance on AML and monopolistic practices signals tougher regulations ahead for crypto exchanges operating in the region.

With South Korea set to introduce new regulatory frameworks in H2 2025, will other exchanges face similar crackdowns?

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