Dunamu, the parent company of Upbit, was fined 35.2 billion won, the most expensive fine in the history of Korean cryptocurrency.

The Financial Intelligence Unit (FIU) under the South Korean Financial Services Commission (FSC) officially announced today (6th) that it has issued an administrative fine of 35.2 billion won (approximately US$24.35 million) against Dunamu, the operator of South Korea’s largest cryptocurrency exchange Upbit.
(Preliminary summary: Upbit violated KYC regulations" New users are "prohibited from withdrawing money for up to 3 months", and in the worst case, the exchange license may be revoked?)
(Background supplement: South Korea's Naver is acquiring the Upbit crypto exchange! Can you use LINE to trade crypto assets and Korean won stablecoins in the future?)

According to the Korean media "News1", the Financial Intelligence Unit (FIU) under the South Korean Financial Services Commission (FSC) officially announced today (6) that it will offer 35.2 billion won (approximately 2,435) to Dunamu, the operator of South Korea's largest cryptocurrency exchange Upbit. million) administrative fine. This is the largest administrative fine ever issued by South Korean financial authorities to a single institution, setting a new record for the supervision of the virtual asset industry.

The main reason for the fine: 8.6 million violations of anti-money laundering laws

According to public information, the FIU conducted on-site inspections of Dunamu from August to October 2024 and found as many as 8.6 million violations of the Specified Financial Transaction Information Reporting and Utilization Act (referred to as the Special Money Law), mainly including:

• Incomplete customer identity verification (KYC): approx. 5.3 million transactions, such as using a selfie ID card for system testing, leaving the address bar blank or filling it in randomly, and not verifying the encrypted serial number of the driver's license, etc.
• Loss of transaction restriction obligations: approximately 3.3 million transactions, allowing transactions by users who have not completed verification, or not immediately restricting transactions when there is suspicion of money laundering.
• Failure to report suspicious transactions: 15 transactions involving search warrants from judicial authorities were not reported voluntarily.

Follow-up Suspension of Business

It is worth mentioning that this fine is not a single punishment. As early as February this year, the FIU imposed a three-month partial business suspension on the grounds that Dunamu had transactions with undeclared virtual asset service providers (VASPs), and punished 9 executives, including former CEO Li Xiyu.

Dunamu had initially filed an administrative lawsuit and obtained a temporary injunction, but this 35.2 billion fine was the subsequent regulatory punch. It was decided after 4 times of review by the Sanctions Review Committee and 2 times by the Dispute Review Subcommittee. In response, Dunamu's official response stated: "It has significantly strengthened investor protection measures and will make every effort to prevent similar incidents from happening again and provide users with a safer trading environment."

However, the industry originally estimated that fines may reach hundreds of billions or even trillions of won, so the penalty of 35.2 billion won is considered relatively "moderate". Market participants believe that this is "a small burden" for Upbit's leading position with a market share of more than 80%, and the short-term impact will be limited.