South Korea’s Financial Intelligence Unit (FIU) has announced a three-month partial business suspension on Upbit, citing violations related to transactions with unregistered virtual asset service providers. This announcement was made on their website on February 25.
According to the FIU report, Upbit facilitated 44,948 virtual asset transactions with 19 unregistered service providers between August 28, 2022, and August 23, 2024. This activity violated South Korea’s Act on Reporting and Using Specified Financial Transaction Information. The report further indicates that Upbit failed to verify customer identities properly, allowing over nine million customer re-verifications without collecting valid identification documents. It also processed transactions for users with incomplete or incorrect address information. Additionally, Upbit neglected its obligation to monitor and report suspicious transactions, including those involving high-risk customer accounts and large-volume crypto trades, raising concerns about potential money laundering risks.
In a previous incident on November 27, 2019, Upbit experienced a significant security breach when hackers transferred 342,000 Ethereum (ETH), valued at approximately $815 million today, from the exchange's hot wallet to an unknown wallet address. In response to this breach, Upbit's operator Dunamu Inc. temporarily suspended deposit and withdrawal services for at least two weeks to enhance security measures.
According to Coin Market Cap, Dunamu Inc., established in 2012 and based in Seoul, South Korea, is a fintech company focused on blockchain and financial services. It operates Upbit, a cryptocurrency exchange launched in 2017 that has grown to become one of South Korea’s largest by trading volume. Upbit provides a platform for trading various cryptocurrencies and supports both retail and institutional investors.
The Korea Financial Intelligence Unit (KoFIU), established on November 28, 2001, operates under the Financial Services Commission (FSC) as South Korea's central agency for anti-money laundering (AML) and countering the financing of terrorism (CFT). KoFIU is responsible for collecting, analyzing, and disseminating financial information related to suspicious transactions and large cash transactions to law enforcement agencies.