Upbit operator drags South Korea’s FIU to court

Upbit’s parent company, Dunami, is dragging South Korea’s financial intelligence unit (FIU) to court, hoping to overturn a three-month ban on new user transactions.

The FIU issued a temporary ban on the exchange following the use of its trading platform by unreported virtual asset operators. The agency also took action against Dunamu’s CEO and its compliance officer, a move that the company is looking to overturn.

Upbit operator sues South Korea’s FIU

According to reports, the Virtual Asset Inspection Department inspected the company’s site, with the exercise taking place from August to October 2024, discovering more than 45,000 anonymous transactions with exchanges overseas. The regulators also discovered issues related to the system’s verification process.

For example, the system will allow new users to submit copies of their identification, which would be blurred or missing several components, instead of the original. The regulator also discovered a fatal flaw related to the submission of these documents, showing a need for issuing the order.

According to Upbit, the circumstances and details around the investigations, the sanctions, and the severity were understated. The platform mentioned that there were enough reasons to challenge the ban.

FIU sanction and its relation to market dominance

According to reports, the sanctions would not hurt the company. Experts mentioned that instead of the sanctions making users leave, they would be inclined to stay, with that resolve meaning that the company can enjoy an influx of new users.

However, it doesn’t mean Upbit is in the clear, because the legal battle may affect its relationship with its banking partners. The company may find it difficult to negotiate expired contracts due to its confrontation with the law. Stricter regulators alongside the sanctions could stifle crypto trading. It may also force others to move to jurisdictions with better crypto rules.

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