Korea's highest-ever cryptocurrency fine! Upbit's parent company Dunamu fined 35.2 billion KRW

South Korea’s Financial Services Commission (FSC) and its Financial Intelligence Unit (FIU) have officially announced today (the 6th) that they are imposing an administrative fine of 35.2 billion KRW (approximately $24.35 million USD) on Dunamu, the operator of Korea’s largest cryptocurrency exchange, Upbit.

Background context: Upbit previously violated KYC regulations, with new users facing a maximum “three-month deposit withdrawal ban,” and there are concerns that the exchange’s license could be revoked if violations persist. Additionally, South Korea’s Naver is reportedly in the process of acquiring Upbit, raising questions about future trading options—such as using LINE to trade cryptocurrencies or stablecoins pegged to the Korean won.

According to reports from South Korean media outlet News1, this is the largest administrative fine ever imposed on a single entity by Korean financial authorities, setting a new record in virtual asset industry regulation.

Reason for the fine: Violations involving 8.6 million instances of anti-money laundering (AML) law breaches.

Public records show that the FIU conducted on-site inspections of Dunamu from August to October 2024, uncovering up to 8.6 million violations of the Act on Reporting and Using Financial Transaction Information (commonly known as the AML Act). The main violations include:

• Incomplete customer identity verification (KYC): Approximately 5.3 million instances, such as using selfies of IDs for system testing, leaving address fields blank or filled with random data, and failing to verify encrypted license numbers.
• Failure to enforce transaction restrictions: Around 3.3 million instances where transactions were allowed for unverified users or when suspicious activity was not promptly restricted.
• Failure to report suspicious transactions: 15 cases involving transactions with search warrants that were not proactively reported.

Follow-up measures after the suspension:
It’s worth noting that this fine is not the only penalty. Back in February, the FIU imposed a partial three-month suspension of Dunamu’s operations due to transactions with unreported virtual asset service providers (VASPs), along with disciplinary actions against nine executives, including former CEO Lee Seok-woo. Dunamu initially filed an administrative lawsuit and obtained a temporary injunction, but the recent 35.2 billion KRW fine was finalized after four sanction review committee meetings and two dispute review panels.

Dunamu responded to the penalty by stating, “We have significantly strengthened investor protection measures and will do our utmost to prevent similar incidents from happening again, providing users with a safer trading environment.”

Industry insiders note that the fine, while substantial, is relatively “moderate” compared to initial estimates that suggested fines could reach hundreds of billions or even trillions of KRW. Given Upbit’s dominant market share of over 80%, the financial burden is considered manageable, with limited short-term impact.

Related reports:

• Upbit to list Hyperlane (HYPER) and RedStone (RED)
• Worldcoin (World) launches on Upbit, with $WLD surpassing $2
• Three Arrow Capital holds 52 million tokens awaiting sale
• Upbit and Bithumb launch USD and WLFI trading pairs simultaneously, preparing for a surge in Korea

This article was first published by BlockTempo, a leading blockchain news media outlet.