Upbit Suspension Frozen by Court, Crypto Giant Back in Action

A South Korean court has temporarily halted a three-month suspension on Upbit imposed by the Financial Intelligence Unit.
The court granted an injunction that allows Upbit to resume onboarding new users during the ongoing legal dispute.
The Financial Intelligence Unit accused Upbit of conducting transactions with unregistered foreign crypto service providers.

A South Korean court has temporarily halted a regulatory suspension imposed on Upbit, allowing the crypto exchange to resume new user registrations. The Financial Intelligence Unit (FIU) had earlier barred Upbit from onboarding clients, citing policy violations. However, the court granted an injunction that delayed enforcement of the ban until 30 days after the final ruling.

Upbit Granted Injunction Amid Legal Dispute

On February 25, the Seoul court granted Upbit permission to delay the three-month ban imposed by the FIU. The FIU issued accusations against Upbit because the exchange worked with unregistered foreign providers of virtual asset services (VASPs). The cryptocurrency transactions at Upbit broke South Korean laws for crypto compliance, which were created to deter illegal border operations.

Before the order came into effect, Dunamu filed legal documents alongside an injunction request against the order to maintain business operations. The court granted Upbit permission to maintain user growth activities until the legal procedures were complete. The court granted this decision to allow Upbit to continue operations until authorities make their final determination about the matter.

Since its start in 2017, Upbit has established itself as the largest crypto exchange in South Koreas market. It maintains its position as market leader but continues to receive escalating regulatory oversight of its business activities. The court-imposed delay of penalties remains in effect while Upbit continues operations, but it will eventually defend itself against the legal claims.

FIU Flags Upbit for Verification Issues

The FIU executed another investigation which revealed Upbit might violate its Know Your Customer (KYC) requirements by failing to properly verify customer information during business license renewals. The authorities analyzed user data before finding more than 600,000 cases of suspected Know Your Customer compliance violations throughout the platform. The approach of Upbit for confirming user identity generated doubt about the platforms capacity to properly authenticate platform users.

Under the 2018 anti-anonymous trading law, South Korean law requires strict implementation of KYC requirements. According to the required rules, these crypto platforms need to complete user verification before starting any transactions. The Financial Intelligence Unit of South Korea argued that Upbit violated financial regulations by conducting activities with unregistered foreign exchanges without following proper standards.

Official statements indicated Upbit processed more than 45,000 transactions with non-registered international platforms. Following such a practice would break the Act on Reporting and Using Specified Financial Transaction Information. The South Korean government maintains escalating control over virtual asset services from foreign companies to stop criminal financial activity.

Bithumb Raided in Separate Prosecutorial Probe

The office of prosecutors initiated a formal investigation targeting Bithumb due to allegations that company resources were misused during a real estate deal. The law enforcement team from Seoul Southern District carried out a search and seizure operation in Yeoksam-dong where Bithumb maintained its headquarters. The authorities believe that Bithumb paid 3 billion won as lease deposit for an apartment in Seongsu-dong.

According to allegations both Bithumbs former CEO and present advisor Kim Dae-sik received benefits from this lease contract. The investigators are assessing if the business financial rules got violated during this transaction. Law enforcement officials are collecting evidence while deciding when to prosecute Bithumb for the crime.

Text source: TronWeekly

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