Catenaa, Saturday, March 08, 2025-South Korean regulators’ sanctions against Upbit, the country’s leading crypto exchange, have drawn strong criticism for being ineffective.
The Financial Intelligence Unit (FIU) issued a three-month business suspension to Dunamu, the operator of Upbit, following revelations that the exchange facilitated nearly 45,000 virtual asset transfer transactions with 19 unreported, overseas-based operators.
The sanctions restrict new users from transferring or receiving crypto in their wallets during the suspension but do not prevent them from using Upbit to trade or withdraw Korean won (KRW).
Additionally, the sanctions do not impact Upbit’s dominant position in the market, where it controls over 70% of domestic market share. Critics argue that these measures would merely strengthen Upbit’s monopoly, as customers value convenience and are unlikely to leave the platform for minor restrictions.
While the FIU’s ruling also includes fines and disciplinary actions against Upbit’s executives, industry experts believe the sanctions fail to address the core issues.
They argue that the punitive measures would result in customers remaining on Upbit, driving its commission-based revenue, rather than causing them to seek alternative exchanges.
The FIU has yet to finalize the fines, with a spokesperson indicating that further discussions would occur in upcoming hearings.
Despite the sanctions, there remains a broader debate over the effectiveness of the actions, with some calling for symbolic fines rather than what they deem as ineffective sanctions.
Regulators also flagged multiple violations, including issues with Upbit’s Know Your Customer (KYC) procedures, which have raised concerns about security and anti-money laundering compliance.
