Upbit's Regulatory Suspension Explained

Upbit, recognized as one of South Korea's largest cryptocurrency exchanges by trading volume, is currently enduring a three-month partial suspension following several regulatory violations.

This decision is part of an ongoing evaluation by South Korean authorities, which recently initiated an antitrust investigation against the exchange. Regulatory bodies have sanctioned Dunamu Company, Upbit's owner, for engaging in transactions with non-compliant virtual asset firms.

Details of Regulatory Violations

As revealed by local media, Upbit was cited for failing to complete proper customer verification processes and for not reporting suspicious transactions. Consequently, the exchange is prohibited from allowing new customers to transfer virtual assets between March 7 and June 6, 2025.

In addition to this suspension, Upbit faces potential personnel actions and financial penalties that could adversely affect its reputation and standing among its peers in Korea's crypto market.

Official Response from Upbit

In a public statement, Upbit admitted to the infractions and expressed commitment to rectify these issues. The platform aims to enhance compliance with existing legal regulations while actively improving its transaction management systems. Upbit reassured users of its dedication to preventing future infringements.

“We understand the importance of the financial authorities’ sanctions, which aim to establish a stable anti-money laundering system and enhance compliance among virtual asset operators,” the statement expressed.

While existing users can continue trading without interruption, new customers currently face limitations on transferring virtual assets to external wallets. Upbit insists that these sanctions may change based on ongoing regulatory assessments.

The Regulatory Landscape in South Korea

The scrutiny surrounding Upbit is indicative of a broader tightening of regulations within South Korea's cryptocurrency sector. This clampdown follows increased attentiveness from government institutions regarding compliance practices in the crypto sphere.

Approximately five months ago, South Korean authorities launched an investigation into potential monopolistic behaviors by Upbit, further intensifying regulatory focus on this significant player in the market. The exchange faced temporary suspension last month due to allegations of over 700,000 Know Your Customer (KYC) violations.

This scrutiny is compounded by earlier concerns raised about an alleged 600,000 potential KYC violations flagged by the nation’s financial regulator. As South Korea gears up to introduce a new phase of its crypto regulatory framework by the second half of 2025, the country continues to emphasize compliance and transparency.

Upbit's Historical Performance

Despite the recent challenges, Upbit has maintained a robust position in the market. It was notably the first exchange in South Korea to comply with the newly established Virtual Asset User Protection Act, signifying its intent to improve transparency within the industry.

Historically, Upbit led trade volumes among Korean exchanges, even outperforming major global competitors like Coinbase and OKX two years ago. This market dominance underscores Upbit's extensive user base and influence within the cryptocurrency realm.