A South Korean court temporarily paused Upbit’s three-month business ban, letting the platform start accepting new customers again while a legal dispute with the country’s Financial Intelligence Unit (FIU) continues.
The FIU first sanctioned Upbit on February 25, forbidding it from processing new users’ deposits and withdrawals.
Upbit was accused of breaking South Korea’s crypto compliance framework by doing business with unregistered virtual asset service providers (VASPs). This led Upbit to seek immediate legal relief to challenge the suspension.
Upbit Wins Legal Relief As Court Halts Ban Temporarily
Seeking immediate legal relief, Dunamu, the parent company of Upbit, sued to overturn the suspension and ask for a court order to stop the enforcement.
According to the local media outlet, on March 27, the court gave an injunction, which means that the suspension will be delayed for 30 days after the final court decision. As a result, the court’s decision allows Upbit to continue registering new customers.
Starting in 2017, Upbit is South Korea’s biggest cryptocurrency exchange by trading volume. Despite Upbit’s strong position, it has been continuously facing regulatory scrutiny for several months.
In October 2023, the Financial Services Commission (FSC) started looking into this to identify possible anti-monopoly violations, and since then, regulators have been keeping an eye on it.
In a different case, the FIU flagged Upbit for possible Know Your Customer (KYC) failures, finding as many as 600,000 possible KYC violations during a review related to the platform’s business license renewal.
To strengthen crypto regulations, South Korea’s government has also increased oversight around cross-border digital asset transactions as part of a wider crackdown on unlicensed exchanges.
As part of these efforts, the government recently required businesses to report crypto-related transactions used to avoid paying taxes or change the value of the currency.
At the FIU’s request, Google Play and Apple’s App Store have started to block access to some foreign crypto platforms.
Bithumb Under Fire Over Misuse of Company Funds
While Upbit faced compliance challenges, Bithumb, another major exchange, came under investigation. South Korean prosecutors began a formal investigation into Bithumb last week, one of the country’s biggest cryptocurrency exchanges. Allegations of misusing company funds to purchase an apartment for its former CEO have prompted this investigation.
The Seoul Southern District Prosecutors’ Office reported that they searched Bithumb’s Yeoksam-dong headquarters and seized some items.
Officials think that Bithumb gave its former CEO and current advisor, Kim Dae-sik, a security deposit of 3 billion Korean won (about $2.4 million) as a lease deposit for an apartment.
Even as regulatory scrutiny intensifies, South Korea’s crypto market has seen substantial growth. Millions of people in South Korea invested in cryptocurrencies last year.
15.59 million South Koreans had accounts on the country’s top five cryptocurrency exchanges by the end of November, according to data from the Bank of Korea. Furthermore, deposits in crypto exchanges doubled, from 4.7 trillion won ($3.2 billion) in October to 8.8 trillion won ($6.03 billion) in November.
