- South Korean court temporarily lifts Upbit’s new client ban, allowing exchange to operate again.
- Upbit’s parent company, Dunamu, challenges FIU’s suspension, saying sanctions are unfair.
- Despite regulatory woes, Dunamu reports 2024 financial growth driven by crypto trading.
A South Korean court has lifted the three-month suspension on Upbit, the country’s largest cryptocurrency exchange, so it can start taking new clients again. The suspension was imposed by South Korea’s Financial Intelligence Unit (FIU) for alleged violations of the Specific Financial Information Act.
This comes after Upbit’s parent company, Dunamu, filed a lawsuit against the regulator to overturn the suspension. The court’s decision gives Dunamu a chance to keep operating while the legal battle continues.
Court Halts Suspension, Allows New Client Onboarding
March 27, the Seoul Administrative Court granted an injunction to Dunamu, temporarily suspending the partial business suspension order from the FIU. This injunction delays the enforcement of the three-month ban that was to start on March 7.
The ban would have prevented Upbit from taking new clients, was in response to the FIU’s accusations that Upbit failed to comply with regulatory standards for Know Your Customer (KYC) protocols. Under the court’s ruling, Upbit can now onboard new users so the exchange has a temporary green light to operate.
Dunamu, Upbit’s parent company, filed an injunction after the FIU suspended the exchange, saying Upbit violated the Specific Financial Information Act. The suspension was from March 7 to June 6. Dunamu argued the penalty was too harsh and was imposed without full consideration of the circumstances, including the measures the company had already taken to comply with the regulations.
Upbit Faces Regulatory Scrutiny for KYC and Anti-Monopoly Violations
Upbit, founded in 2017, is South Korea’s largest crypto exchange. But the platform has been under the regulatory microscope for a while now. In October last year, the Financial Services Commission (FSC) launched an investigation into Upbit for possible anti-monopoly law violations.
Then, the FIU found thousands of potential KYC violations, a critical part of the country’s financial regulatory framework. They found 500,000 to 600,000 possible KYC violations, so Upbit is under the spotlight.
The FIU found that Upbit operated with unregistered foreign crypto exchanges, which violated the rules regarding reporting financial information in 45,000 transactions. Therefore, the regulatory authority chose to place Upbit under suspension which restricted the exchange from adding new users.
The South Korean government imposed new rules for crypto regulation in 2018 by prohibiting unverified cryptocurrency trading activities. The introduction of KYC requirements by Upbit and other exchanges became necessary to permit digital asset trading.
Upbit, along with other South Korean exchanges, struggles with significant obstacles from not following the established regulations.
Legal Battle Continues Amid Strong Financial Performance
The regulatory troubles have not impacted Dunamu’s financial results because Upbit’s parent company achieved robust results in 2024. The operation results grew by 85.1% compared to last year and reached 1.19 trillion KRW ($682 million).
The total revenue for last year rose 70% to 1.73 trillion KRW ($1.1 billion). The April Bitcoin halving period and positive US news fueled Bitcoin trading, which led to the crypto market’s upward trend.
Dunamu faces a significant threat to their acceleration from the ongoing legal conflict with the Financial Intelligence Unit. According to Dunamu, the suspension measures fail to match the circumstances and will impact their operations negatively. Dunamu obtained a 30-day operational window from the court through its temporary suspension lifting to proceed before the lawsuit reaches its final determination.
