- South Korea’s FIU is investigating Upbit for failing to correctly confirm 500,000-600,000 accounts.
- Upbit may face billions in fines for KYC violations beneath South Korean legal guidelines.
- The trade’s license renewal is being delayed because the FIU is investigating attainable criminality.
South Korea’s Monetary Intelligence Unit (FIU) is investigating cryptocurrency trade Upbit over what may change into one of many largest Know Your Buyer (KYC) scams within the historical past of the trade.
The main target of the investigation are 600,000 accounts that allegedly did not undergo correct verification processes.
These violations had been uncovered throughout a routine assessment of Upbit’s enterprise license renewals, which has now change into routine.
Accounts with out correct identification paperwork
The FIU’s complete assessment, which started in late August, uncovered severe flaws within the trade’s account verification system. Authorities discovered that many accounts had been opened with unclear or improperly offered identification paperwork.
In some circumstances, it was unimaginable to confirm vital particulars reminiscent of names and registration numbers.
South Korea has mandated strict KYC checks to stop legal actions, together with cash laundering, inside the crypto market. With out correct id verification, these accounts may simply be exploited for unlawful functions.
Upbit dangers fines of as much as billions of gained
If the fees are confirmed, Upbit, one of many 23 South Korean exchanges that came together for self-regulation Could must face heavy positive in 2023.
Below South Korea’s Particular Monetary Transactions Data Act, every violation may lead to a positive of as much as 100 million gained (about $75,000).
There are doubtlessly 500,000 to 600,000 affected accounts, in keeping with local source Based on sources conversant in the problem, the full positive may attain billions of {dollars}, which might be a big blow to the trade and the broader crypto trade.
Upbit’s license renewal course of has already been delayed indefinitely on account of these violations. Usually a routine course of for crypto exchanges each three years, the assessment is now mired in uncertainty because the FIU fastidiously examines every flagged account for potential criminality.
In the meantime, Upbit has remained tight-lipped in regards to the investigation, citing authorized restrictions on sharing particulars. Nonetheless, imprecise statements from the corporate have raised considerations in regards to the seriousness of the breaches and whether or not they could possibly be linked to cash laundering.
Because the investigation continues, the crypto world is watching intently, awaiting the potential consequence of what may change into a landmark case in KYC and anti-money laundering enforcement.
