Dunamu to comply with W35.2 bil. fine over customer verification violation

Upbit's logo / Courtesy of Dunamu

Dunamu, the operator of the country’s largest cryptocurrency exchange Upbit, said Friday that it has strengthened its monitoring system to protect investor rights after Korea's financial watchdog announced its decision to fine it 35.2 billion won ($24.3 million) for allegedly violating customer identification obligations.

It is the largest fine ever imposed on a domestic cryptocurrency exchange.

Local media outlets had initially reported that Dunamu rejected the fine and was planning to file a lawsuit against the decision. However, a company official confirmed to The Korea Times that it is working on countermeasures in response to the decision from the Financial Intelligence Unit (FIU), adding Dunamu has also already taken the necessary steps to avoid a recurrence.

The FIU announced Thursday that Dunamu allegedly did not fully comply with the “Travel Rule” in about 5.3 million cases and violated transaction restriction obligations in about 3.3 million cases while failing to report 15 suspicious transactions.

The Travel Rule requires cryptocurrency exchanges to report transactions exceeding 1 million won under the authorities’ Financial Action Task Force guidelines. The rule obliges exchanges to share sender and recipient information for transfers above that threshold.

“Dunamu did not conduct the customer verification process thoroughly, including cases involving blurred or unverifiable documents for identification and incorrect personal information,” FIU said in a statement.

“The agency also found several cases where Dunamu did not restrict transactions despite incomplete verification procedures.”

Dunamu said the company fully understands the watchdog’s decision and is now working on its countermeasures.

“Dunamu has enhanced the exchange’s monitoring system to protect investors’ rights,” a Dunamu official said.

“The company has completed addressing all the issues raised by the FIU.”