South Korean Court Lifts Upbit’s Three-Month Ban on New Customer Registrations

A South Korean court has temporarily lifted a three-month business suspension imposed on crypto exchange Upbit, allowing the platform to resume onboarding new clients while a legal dispute with the country’s Financial Intelligence Unit (FIU) remains ongoing.

The FIU initially sanctioned Upbit on February 25, prohibiting it from processing deposits and withdrawals for new users.

The regulator claimed Upbit had violated policies restricting transactions with unregistered virtual asset service providers (VASPs), a breach of South Korea’s crypto compliance framework.

In response, Upbit’s parent company, Dunamu, filed a lawsuit to overturn the suspension and requested an injunction to pause the order.

On March 27, local outlet Newsis reported that the court granted the injunction, delaying enforcement of the suspension until 30 days after a final court ruling. The move enables Upbit to continue accepting new customer registrations in the meantime.

Upbit, founded in 2017, is South Korea’s largest cryptocurrency exchange by trading volume.

However, it has been under regulatory scrutiny in recent months. In October 2023, the Financial Services Commission (FSC) began investigating the exchange for potential violations of anti-monopoly laws.

In a separate case, the FIU flagged Upbit for possible Know Your Customer (KYC) failures, identifying as many as 600,000 potential KYC violations in a review tied to the platform’s business license renewal.

South Korean law mandates that crypto exchanges comply with strict KYC rules following the ban on anonymous trading introduced in 2018.

The FIU also accused Upbit of conducting over 45,000 transactions with unregistered foreign exchanges, a violation of the Act on Reporting and Using Specified Financial Transaction Information.

UPbit getting ready to open up crypto investment accounts from Korean Institutions.

Korea GTM for global foundations will need to prepare how to get attentions from outside the core Web3 community.

More opportunity, more job to do. pic.twitter.com/r8x0xEAv50

In a broader crackdown on unlicensed exchanges, South Korea’s government has increased oversight of cross-border digital asset activity.

The country recently mandated that businesses report crypto-related transactions used for tax evasion or currency manipulation.

In response, Google Play and Apple’s App Store have begun blocking access to certain foreign crypto platforms at the request of the FIU.

Last week, South Korean prosecutors launched a formal investigation into Bithumb, one of the country’s largest cryptocurrency exchanges, over allegations that company funds were misused to facilitate an apartment purchase for its former CEO.

The Seoul Southern District Prosecutors’ Office also executed a search and seizure operation at Bithumb’s headquarters in Yeoksam-dong.

Authorities suspect that Bithumb provided a 3 billion Korean won (approximately $2.4 million) lease deposit for an apartment in Seongsu-dong to its former CEO and current advisor, Kim Dae-sik.

Last year, South Korea’s cryptocurrency investors crossed 15 million.

According to figures submitted by the Bank of Korea, 15.59 million South Koreans held accounts on the nation’s top five cryptocurrency exchanges by the end of November.

Deposits in crypto exchanges also doubled, rising from 4.7 trillion won ($3.2 billion) in October to 8.8 trillion won ($6.03 billion) in November.

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