Upbit owner clashes with South Korean regulators in legal battle

The legal show down arrives as South Korea intensifies crypto oversight.

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

Dunamu, the parent company of South Korea’s largest crypto exchange, Upbit, has reportedly taken legal action against the country’s Financial Intelligence Unit (FIU) over a business suspension order.

This comes as South Korean authorities are tightening their grip on crypto-related crimes by launching a dedicated unit to handle digital asset investigations.

Upbit challenges FIU

On Feb. 28, Dunamu reportedly filed a lawsuit with the Seoul Administrative Court seeking to overturn the FIU’s sanctions.

Last November, South Korean regulators accused Upbit of failing to conduct proper customer due diligence in hundreds of thousands of cases.

Due to this, the FIU barred the exchange’s new customers from transferring virtual assets on Upbit between March 7 and June 6

However, Dunamu has challenged this position, arguing that the penalty will significantly impact its operations.

Dunamu insisted that it has taken necessary compliance measures in response to regulatory concerns and believes the sanctions are disproportionate. The firm also claimed that the FIU sanctions were made without fully considering key facts and circumstances.

Dedicated crypto unit

In a parallel development, South Korea’s Seoul Southern District Prosecutors’ Office has launched a specialized Joint Investigation Unit (JIU) to combat cryptocurrency-related crimes, as local media reported on Feb. 27.

According to the report, the newly established unit comprises 35 financial regulators and prosecutors from the Financial Services Commission and the Financial Supervisory Service. Their primary focus is investigating and prosecuting crypto-related fraud, theft, and illicit market activities.

The authorities introduced this initiative following the success of a temporary task force set up in 2023 to combat rising cryptocurrency-related offenses. The increasing complexity of these crimes prompted the creation of a permanent unit to ensure more effective enforcement.

Since the launch of the initial task force, prosecutors have charged 74 individuals and arrested 25 in cases involving fraudulent schemes and market manipulation.

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