Upbit is considering appealing a sanction of 35.2 billion won (about $25 million) and a three-month operational suspension imposed by South Korea’s Financial Intelligence Unit (FIU) for alleged deficiencies in AML/KYC controls. The decision, issued on November 6, 2025, affects the country’s largest platform and raises questions about proportionality and market stability. The case immediately centers the debate on regulatory rigor, market integrity, and operational continuity in the crypto sector.
Upbit Faces FIU Sanction and Prepares Possible Appeal
The FIU applied the fine and restricted operations after identifying, according to its assessment, recurring failures in customer verification and other gaps in anti-money laundering protocols. The measure fits into an escalating sequence of supervisory actions, following a disciplinary warning to the CEO and a suspension of deposits and withdrawals decreed in February 2025.
Dunamu, Upbit’s parent company, is evaluating filing an administrative appeal which typically challenges both the facts established by the regulator and the proportionality of the sanction. This signals a likely legal and procedural dispute over the scope and foundations of the penalties.
Upbit is a systemic player in the South Korean market: it had more than 8.3 million registered accounts and operates daily liquidity that occasionally exceeds $1.6 billion, with a catalogue of more than 180 cryptocurrencies and 300 trading pairs. Its size amplifies the potential impact of the sanction on liquidity and retail confidence.
The company had driven major strategic moves, including negotiations to merge with Naver for a fintech group valued at $13.8 billion and plans for an IPO on Nasdaq with a combined target valuation of around $34 billion; these initiatives now face increasing regulatory uncertainty.
The action against Upbit is part of a broader tightening: the FIU and the Financial Services Commission apply an inspection and sanction protocol that follows a chronological order for reviews and penalties. This systematic approach indicates that wider enforcement actions across the industry are underway.
Other domestic exchanges —Bithumb, Coinone, Korbit, and Gopax— could face similar sanctions in upcoming oversight rounds. According to industry forecasts, the sanction cycle is expected to remain active through the first half of 2026.
The clash between compliance demands and crypto operating models poses a dilemma for supervisors: imposing strict controls preserves integrity and reduces illicit risks, but the increased operational burden can heighten costs and slow market innovation.
For users and service providers, the immediate consequence is greater uncertainty regarding market access, asset listings, and operational continuity; in the medium term, regulatory barriers could reinforce market concentration by weakening smaller competitors.
The assessment of the appeal by Dunamu will mark the next procedural step; meanwhile, the FIU continues its sanction cycle expected to last through mid-2026. The final outcome will shape not only Upbit’s trajectory but also the compliance standards that will govern South Korea’s broader crypto ecosystem.