Upbit faces 3-month partial biz suspension, CEO receives disciplinary warning

Upbit headquarters in Gangnam District, Seoul / Newsis

Dunamu, the operator of the country’s largest cryptocurrency exchange, Upbit, was given a three-month partial business suspension for violating its obligation to refrain from transactions with unregistered virtual asset service providers, Korea's financial regulator said Tuesday.

This measure prohibits new customers from transferring virtual assets.

Additionally, Dunamu CEO Lee Sirgoo received a "reprimand warning," while officers in charge of compliance and reporting were notified of dismissal measures. Including them, a total of nine executives and employees are facing disciplinary action.

The imposition of fines was not included this time. The Financial Services Commission said that a final decision on whether to impose fines will be made after further discussions at the Financial Intelligence Unit (FIU), which monitors offshore tax evasion and money laundering.

The partial business suspension period runs from March 7 to June 6. During this period, existing customers can trade without restrictions, but new customers will be restricted from transferring virtual assets externally — both deposits and withdrawals. However, virtual asset trading and exchanges as well as won deposits and withdrawals will remain unrestricted.

The FIU conducted an on-site inspection of Dunamu from August to October last year.

The inspection revealed that the company violated the Act on Reporting and Using Specified Financial Transaction Information by facilitating a total of 44,948 virtual asset transfer transactions with 19 unregistered overseas virtual asset service providers.

Additionally, various violations of Know Your Customer obligations were identified, including 34,477 cases where unverifiable identification documents, such as out-of-focus IDs, were collected and 5,785 cases where addresses were improperly recorded.

Violations of transaction restriction obligations were also identified. These included 354 instances where transactions were allowed without conducting customer verification within the required re-verification period, and 226,558 instances where transactions were permitted without customer verification, despite risk assessments indicating concerns about potential money laundering.

The prices of Bitcoin and other cryptocurrencies are displayed on a screen at the Upbit lounge in Gangnam District, Seoul, Dec. 11. Yonhap

The FIU said it will require Dunamu to submit corrective actions and closely review whether the identified legal violations have been rectified.

“Given the strict sanctions imposed for violations of the Act on Reporting and Using Specified Financial Transaction Information, virtual asset businesses must ensure full compliance with their obligations under the law,” an FIU official said. “They should also reinforce their anti-money laundering frameworks by establishing more robust compliance systems for virtual asset-related regulations.”

In response to the FIU’s announcement, Dunamu issued a statement, saying, “We understand the intent behind the financial authorities’ sanctions and will carefully discuss future measures.”

It, however, stressed that existing and new users will still be able to trade virtual assets as usual.