Upbit Challenges South Korea's Crypto Crackdown

Upbit's parent company, Dunamu, has filed a lawsuit against South Korea's Financial Intelligence Unit (FIU) challenging its imposed sanctions. The lawsuit, submitted to the Seoul Administrative Court on Feb. 27, seeks to overturn the FIU's partial business suspension order and halt its enforcement through an injunction.

The FIU's sanctions restrict Upbit from processing external crypto transactions for new customers while services for existing customers remain unaffected. The FIU also imposed disciplinary measures against Upbit and its executives for violating local regulations, with the CEO receiving a formal reprimand and the compliance officer becoming the first to be dismissed by regulators.

Upbit, founded in 2017, is South Korea's largest cryptocurrency exchange. In October 2024, the FSC faced scrutiny over its plans to investigate potential anti-monopoly violations by Upbit. The FIU later identified at least 500,000 KYC compliance violations at Upbit, leading to a business suspension notice in January 2025.

The FIU accused Upbit of facilitating approximately 45,000 transactions with unregistered foreign crypto exchanges and identified serious deficiencies in its customer verification processes. Upbit responded by stating that it has completed necessary corrective measures but believes certain circumstances and details regarding the sanctions were not fully considered.