Key Takeaways
- A South Korean court approved an injunction delaying the FIU’s three-month ban on new client deposits and withdrawals.
- The suspension will now take effect 30 days after a final court judgment
Upbit, a leading crypto exchange in South Korea has received temporary relief from a regulatory suspension that restricted it from onboarding new clients. A South Korean court approved an injunction delaying the Financial Intelligence Unit’s (FIU) three-month ban on new client deposits and withdrawals. The suspension will now take effect 30 days after a final court judgment, allowing Upbit to continue operations for new users
The dispute stems from allegations that Upbit engaged in transactions with unregistered Virtual Asset Service Providers (VASPs). On February 25, the FIU imposed restrictions on Upbit which was challenged by Upbit’s parent company, Dunamu, arguing that the penalty was excessive and harmful to the domestic crypto market.
Upbit has been embroiled in legal troubles for the last few months. In October 2024, the Financial Services Commission (FSC) launched a probe into potential anti-monopoly violations at Upbit. The exchange was later accused of 500,000 to 600,000 potential Know Your Customer (KYC) violations in November last year
South Korea has enforced strict crypto regulations since 2018, when it banned anonymous crypto trading. Exchanges are required to verify users under KYC protocols before allowing them to trade digital assets. Apart from KYC concerns, the FIU further accused the firm of facilitating 45,000 transactions with unregistered foreign exchanges, violating the Act on Reporting and Using Specified Financial Transaction Information.
Many bigwigs in South Korea also hold crypto. A recent disclosure by the Ethics Committee revealed that 20.1% (411 out of 2,047) of senior government officials held digital assets, collectively amounting to 14.42 billion won ($9.83 million). The top holder, Seoul Metropolitan Council member Kim Hye-young, disclosed 1.7 billion won ($1.2 million) in cryptocurrency, including Bitcoin, Ethereum, Dogecoin, and XRP.
The government introduced mandatory crypto asset disclosures for officials ranked level four or higher in 2024. Assets must be valued at the average daily market price at the time of reporting. The top 10 crypto-holding officials control over 8.57 billion won ($5.85 million)
