As a seasoned crypto investor with a keen eye for regulatory compliance and market trends, this latest development involving Upbit has left me somewhat concerned. Having navigated through several crypto winters and seen numerous exchanges rise and fall, I’ve learned to appreciate the importance of robust KYC procedures in maintaining trust and legitimacy within the industry.
According to reports, South Korea’s Financial Intelligence Unit has uncovered approximately 500,000 to 600,000 instances of potential Know Your Customer (KYC) non-compliance on Upbit, the country’s biggest cryptocurrency exchange. If confirmed, these KYC lapses could result in penalties and potential difficulties in renewing their operating license.
Based on an article from Maeil Business Newspaper, a local news agency, it was discovered during the South Korean Financial Intelligence Unit’s on-site inspections for renewing the platform’s business license that there may have been instances of Know-Your-Customer rules being violated.
Currently, Upbit’s license renewal process has been paused, as the authorities need additional time to examine numerous documents that are under suspicion for not meeting the nation’s Know Your Customer (KYC) norms.
By legal requirement, South Korean cryptocurrency platforms must implement robust Know Your Customer (KYC) measures when users open accounts, aiming to ensure these accounts aren’t misused for money laundering or illicit activities.
It’s said that Upbit may be fined approximately 100 million Korean won ($71,500) for each potential violation they are accused of. Given the number of alleged cases, this fine could add up to a staggering $35.8 billion.
Moreover, the report indicates that South Korean regulatory bodies are yet to determine the impact on Upbit’s business license renewal due to this particular matter.
A representative from Upbit stated to Maeil Business that it’s forbidden to disclose details concerning investigations handled by the FIU, according to the Special Financial Transaction Information Act.
“Information is not shared at all even within the company,” said the official.
It is reported that the cryptocurrency exchange may have allowed users to open accounts, even though their names and identification numbers were unclear. Creating accounts without proper verification could potentially lead to these accounts being utilized for illegal activities such as money laundering or criminal actions. Legally, all crypto exchanges in this area must adhere to Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations.
In early October, South Korea’s Financial Services Commission (FSC) announced plans to examine Upbit over allegations of monopolistic practices due to its significant market control and close association with K Bank. The chairman of the FSC expressed apprehension about K Bank’s upcoming initial public offering (IPO), emphasizing potential dangers related to its high dependence on Upbit deposits, which account for approximately 20% of the bank’s total deposits.
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2024-11-15 14:46