South Korean Court Temporarily Halts Upbit's 3-Month Business Suspension

South Korea’s largest crypto exchange, Upbit, has received temporary relief from a three-month business suspension order issued by the Financial Intelligence Unit (FIU). According to a report by Newsis on March 27, the Seoul Administrative Court granted Dunamu, Upbit's parent company, a stay of execution on March 26, effectively delaying the enforcement of the penalty.

The suspension, originally imposed by the FIU on February 25, accused Upbit of violating Korea’s KYC (Know Your Customer) and anti-money laundering (AML) regulations. The penalty specifically targeted Upbit's ability to facilitate cryptocurrency transactions for new users, restricting such operations for three months. The decision was based on findings from an FIU-led investigation that revealed Upbit had allegedly supported transactions with unregistered overseas exchanges and failed to conduct adequate customer verification.

In response to the FIU's sanctions, Dunamu filed a lawsuit on February 27, seeking to overturn the suspension order. Alongside this legal action, Dunamu also requested an injunction to temporarily lift the penalty until the court reaches a final verdict. The court approved this injunction, which means that the suspension order is now on hold until the main lawsuit concludes. Specifically, the suspension will remain inactive until 30 days after the court delivers its ruling in the main case.

As a result, Upbit’s new users can temporarily continue to deposit and withdraw cryptocurrencies, providing a reprieve for the exchange as it navigates its legal challenges.

The upcoming legal battle between Dunamu and the FIU is expected to center on the legitimacy and proportionality of the FIU's sanctions. This case could set a significant precedent for how South Korea regulates its burgeoning cryptocurrency industry, particularly in ensuring compliance with international AML standards. Upbit remains one of the most prominent CEXs globally, and the outcome of this legal dispute could have broader implications for the exchange and the wider crypto market in South Korea.