South Korea investigates Upbit over market dominance concerns

A South Korean lawmaker raised concerns about the exchange close relationship with K Bank.

Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.

South Korea’s Financial Services Commission (FSC) is set to investigate Upbit, the nation’s largest crypto trading platform, amid concerns about its dominant position in the market, as reported by local media outlet einfomax on Oct. 10.

FSC Chairman Kim Byung-hwan confirmed the probe, noting that the agency will examine the virtual asset market’s reliance on Upbit.

The move follows concerns raised by lawmaker Lee Kang-il about Upbit’s relationship with K Bank, South Korea’s first internet-only bank.

K Bank, launched in 2017, is reportedly preparing for an Initial Public Offering (IPO) to raise 984 billion won (around $731.64 million). If successful, it would be among the largest IPOs in 2024. Meanwhile, Upbit remains South Korea’s largest crypto exchange by trading volume and significantly influences the broader Asian market.

Concerns over Upbit’s dominance in K Bank’s deposits

Lee Kang-il revealed that Upbit deposits account for 4 trillion won of K Bank’s 22 trillion won in total deposits, making up nearly 20%. He warned that a disruption in Upbit’s operations could trigger a bank run on K Bank.

Lee also criticized K Bank for offering high interest rates—2.1%—on Upbit customer deposits, calling the rate unsustainable given the bank’s low-profit margins. He further argued that the close relationship between Upbit and K Bank contradicts the principle of separating finance and industry.

In response, the FSC’s chief stated that K Bank’s listing process would undergo a comprehensive review. The Virtual Asset Committee, a body overseeing digital assets in South Korea, will also examine the matter.

Upbit and K Bank’s collaboration

This investigation comes less than a month after Dunamu, Upbit’s parent company, K Bank, and BC Card signed a memorandum of understanding (MOU) to establish a cooperative digital financial services model.

The agreement will leverage Dunamu’s virtual asset trading platform, K Bank’s mobile banking infrastructure, and BC Card’s payment processing systems.

The collaboration aims to drive the growth of South Korea’s digital financial ecosystem by combining the strengths of each company’s technology and services.

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