The Financial Intelligence Unit (FIU) of South Korea has temporarily sanctioned Upbit, the main bitcoin exchange there. Effective right away, new users will not be able to deposit or withdraw digital assets for three months. The bill seeks to enforce national rule compliance and stop illegal trade.
Announced on February 25, the FIU’s decision reflects results indicating Upbit allegedly conducted transactions with unregistered crypto asset service providers (CASPs). Upbit responded by admitting the limitations and apologizing to its clients for any trouble caused.
The exchange guaranteed that all services for current clients will go on without disturbance despite the interim restrictions. Upbit clarified that the penalties are not final and may change based on regulatory assessments. The business said, “New users will regain full access to Upbit’s services should the mandated measures be suspended or lifted.”
The FIU’s investigation of Upbit is a component of a larger legislative campaign aimed at increasing control over bitcoin markets. According to reports, the regulator noted up to 600,000 possible Know-Your-Customer (KYC) infractions, which raised questions over the exchange’s compliance policies. Furthermore, South Korean authorities are ready to reveal the second phase of their crypto regulatory framework in the latter half of 2025, which is likely to strengthen KYC procedures and improve anti-money laundering protocols.
Dunamu, the parent firm of Upbit, is also under investigation; executives there might face fines and disciplinary sanctions. The penalties coincide with a declining trading activity in Upbit, with daily volumes down over 70% since January.
While some business analysts say the penalties will help reduce illegal financial activity, others contend they might inadvertently improve Upbit’s market position. Critics argue that the platform might keep more trade volume and strengthen its hegemony in the South Korean crypto market by limiting new users from moving assets elsewhere.
Upbit has reassured its customers that it will fully assist authorities and offer information when fresh events transpire while regulatory talks are still under progress. The result of these talks can decide whether the sanctions stay in effect or are dropped before the three-month term concludes.
