South Korea’s Financial Intelligence Unit (FIU) has imposed a three-month pause on new customer deposits and withdrawals for the country’s largest cryptocurrency exchange, Upbit. The decision stems from alleged violations of regulations regarding unregistered crypto service providers. The FIU uncovered between 500,000 and 600,000 instances where client identification processes were inadequate in inspections conducted by the FIU in 2024. This triggered sanctions that could lead to Upbit facing a maximum penalty of $34.3 billion. While existing users aren’t affected, new customers are currently restricted, and Upbit is working on addressing these issues and potentially seeing restrictions lifted. The news coincides with a significant drop in trading volumes for Upbit since January – a 70% decrease to around $4.6 billion. The FIU’s action follows tighter regulatory oversight of South Korea’s crypto sector. This includes stricter KYC (know-your-customer) and AML (Anti-Money Laundering) compliance requirements, amidst ongoing legal battles in the crypto space. The move also comes amid concerns about Upbit’s relationship with online bank K-Bank, which is under scrutiny from regulators. Founded in 2017, Upbit stands as South Korea’s largest cryptocurrency exchange by trading volumes, and recently secured a major payment institution license from Singapore. This highlights the exchange’s push into international markets through branches in Indonesia and Thailand.