South Korea's largest cryptocurrency exchange, Upbit, has seen a temporary reversal of a partial business suspension, which had prohibited the platform from servicing new clients for three months.
The decision follows a ruling by a local court on 27 March 2025, granting an injunction filed by Upbit's parent company, Dunamu.
This legal victory allows the exchange to resume offering services to new clients while the legal battle continues.
The suspension was imposed by South Korea's Financial Intelligence Unit (FIU) in response to Upbit’s alleged violations of local regulations.
Specifically, the FIU accused the exchange of conducting business with unregistered foreign virtual asset service providers (VASPs), which contravenes South Korea's stringent anti-money laundering laws.
The FIU’s actions led to a three-month ban on new client deposits and withdrawals, beginning 25 February 2025.
Upbit's parent company, Dunamu, took swift legal action against the FIU, seeking to overturn the suspension order.
On top of this, Dunamu requested an injunction to temporarily lift the ban, a move which was granted by the court, putting the suspension on hold for 30 days after a judgment is reached.
The sanctions were not the first regulatory hurdles Upbit has faced.
On 10 October 2024, the country’s Financial Services Commission (FSC) launched an investigation into potential breaches of anti-monopoly laws by the exchange.
This was followed by concerns regarding the exchange’s compliance with Know Your Customer (KYC) regulations.
In November 2024, the FIU flagged up to 600,000 suspected KYC violations during its review of Upbit’s business license renewal process.
South Korea has enforced strict KYC rules since 2018, requiring citizens to pass identity verification before trading digital assets.
The regulatory crackdown on Upbit is part of a broader effort to tighten control over crypto transactions, both domestically and internationally.
The FIU also raised alarms over Upbit’s role in facilitating transactions with unregistered foreign exchanges.
According to the regulator, Upbit was involved in at least 45,000 such transactions, violating the Act on Reporting and Using Specified Financial Transaction Information.
This represents a serious breach of South Korea's regulatory framework, which requires exchanges to report transactions with foreign entities to prevent financial crimes like tax evasion and money laundering.
South Korea has been ramping up its oversight of the cryptocurrency market in recent years, particularly focusing on overseas exchanges.
In October 2024, the country’s government announced stricter reporting requirements for businesses handling cross-border crypto transactions.
The move aims to address concerns over tax evasion and currency manipulation, areas which the government has identified as high-risk.
The FIU’s efforts to clamp down on non-compliant crypto exchanges have included blocking 17 exchange apps from Google Play.
The regulator has worked with major tech platforms like Apple and Google to limit access to non-compliant crypto trading apps, tightening the country’s control over digital asset transactions.
While the legal battle continues, Upbit’s temporary reprieve offers a moment of relief for the exchange, which remains a major player in South Korea’s crypto space.
The outcome of the ongoing lawsuit will have important implications for both Upbit and the broader crypto industry in the region.
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