"Upbit's Crypto Freeze: New Users Face Deposit, Withdrawal Ban Amid FIU Sanctions"

South Korea's Financial Intelligence Unit (FIU) has imposed a three-month suspension on new customer transactions at cryptocurrency exchange Upbit, effective from March 7 to June 6. The suspension prohibits Upbit from facilitating crypto deposits and withdrawals for new customers during the designated period.

The FIU's action is in response to Upbit's violations of policies against transactions with unregistered crypto asset service providers (CASP). Upbit confirmed the temporary restriction on cryptocurrency deposits and withdrawals for newly registered users, expressing sincere apologies to its users for any inconvenience caused.

The sanction will not affect existing customers, with all trading, buying, selling, and Korean Won (KRW) deposit and withdrawal services remaining fully operational for existing Upbit users. New users can still engage in cryptocurrency trading and KRW transactions on the Upbit platform, but crypto transfers and withdrawals are temporarily restricted.

Upbit has asserted that the temporary restrictions on new customer crypto transfers do not impact the core trading functionalities of the exchange. The company remains focused on enhancing its internal controls and compliance framework to meet the highest industry standards. Upbit has already taken major steps to address the FIU's identified areas for improvement and is committed to adhering to stringent regulatory standards and prioritizing AML compliance.

Upbit will provide timely updates to its users regarding any changes to the current restrictions. Should the FIU's directives be modified, new customers will regain full access to all Upbit services.

Reports from local outlets last month revealed the FIU's preliminary notice of sanctions for Upbit. These reports suggested the exchange could face a six-month ban on new customer registrations, while existing users would retain full trading access. This warning came after on-site inspections conducted in 2024 revealed that Upbit facilitated 44,948 transactions with 19 unregistered overseas virtual asset service providers and violated customer identification obligations in 34,777 cases.

Upbit might face a penalty of up to billions of won, with each violation carrying a penalty of up to 100 million won (approximately $68,600). Apart from the sanction, disciplinary actions have been taken against Upbit's executives, including a reprimand warning for CEO Lee Seok-woo and dismissal of the compliance officer.

South Korea's regulators have adopted a cautious approach to cryptocurrency