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Key Takeaways:
- Upbit faces up to $131.5 billion in fines for nearly 10 million violations uncovered by the FIU.
- Restrictions already limit new deposits, threatening liquidity in South Korea’s crypto market.
- With the Virtual Asset User Protection Act in effect, regulators are tightening enforcement across all major exchanges.
Upbit, South Korea’s largest cryptocurrency exchange, is at risk of facing a record fine of up to 183 trillion won ($131.5 billion USD) following an extensive probe by the Financial Intelligence Unit (FIU). According to lawmaker Min Byung-deok’s office, Dunamu, Upbit’s parent company, was found to have committed 9.57 million violations, primarily related to failures in know-your-customer (KYC) compliance.
These infractions came to light during a comprehensive inspection earlier this year. While the maximum penalty under domestic law could reach 183 trillion won, local analysts suggest a more likely fine between 45 trillion and 95 trillion won ($32.4 billion to $68.4 billion), based on precedent from the banking sector.
Operational Restrictions Already in Effect
The scrutiny of Upbit began in February 2025, when the FIU imposed temporary restrictions on the exchange. The sanctions include a freeze on new user deposits and withdrawals, although existing customers can still trade within the platform. These limits have triggered concerns over market liquidity and trading disruptions, given that Upbit controls more than 80% of South Korea’s crypto market.
Additionally, a three-month suspension has been placed on some of Upbit’s services. One executive and nine employees have faced disciplinary actions, though the final fine is still pending.
Regulatory Reforms Shake South Korean Crypto Sector
The enforcement action against Upbit is part of a broader wave of regulatory tightening. Since the introduction of the Virtual Asset User Protection Act in July 2024, South Korean authorities have begun inspecting other major exchanges such as Bithumb, Korbit, GOPAX, and Coinone.
The new law, designed to boost transparency and user safety in the crypto space, empowers the Financial Services Commission (FSC) to enforce stricter compliance standards. While Upbit was previously lauded for being the first exchange to register under the updated regulations in 2021, this recent scandal underscores the increasing scrutiny even top players now face.
Also Read: South Korea Suspends CBDC Trials as Banks Pivot to Stablecoin Development
Dunamu in Talks as Market Awaits Final Decision
As Dunamu negotiates with the FSC and awaits a final ruling, the outcome could reshape the future of crypto in South Korea. A heavy fine or extended suspension could impact investor confidence, market liquidity, and regulatory expectations for other digital asset platforms.
Despite the pressure, Upbit has reaffirmed its commitment to improving internal controls and anti-money laundering protocols, signaling efforts to regain regulatory trust.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
