FIU Suspends Upbit Operations for 3 Months and Issues Warning to CEO at Dunamu

Upbit operator Dunamu, a virtual asset exchange, will face a three-month partial suspension of business operations and a reprimand for its CEO. This is due to violations of the Act on Reporting and Using Specified Financial Transaction Information (the Specified Financial Transactions Act) by supporting transactions with overseas unregistered virtual asset operators.

The Financial Intelligence Unit (FIU) under the Financial Services Commission announced on the 25th that it will notify Dunamu of a three-month partial suspension of business operations for violating the Specified Financial Transactions Act. Along with this, a reprimand was issued to CEO Lee Seok-woo, and sanctions on the status of nine employees, including dismissal of the compliance officer, were also notified.

The partial suspension of business will take effect from May 7 to June 6, during which the transfer of virtual assets by newly registered customers will be restricted. Existing customers can trade without restrictions. New customers will also be allowed to trade or exchange virtual assets and deposit or withdraw Korean won without restrictions, except for transfers of virtual assets to external parties.

Regarding CEO Lee Seok-woo and the nine employees, considering the responsibility of each actor and the specific degree of legal violations, a reprimand was issued to the CEO. The reporting officer and compliance officer were dismissed, five team leaders received written warnings, and two team leaders were given cautions.

From August to October last year, the FIU conducted an on-site anti-money laundering inspection of Dunamu. The inspection revealed that Dunamu supported a total of 44,948 virtual asset transfer transactions with 19 overseas unregistered virtual asset operators who failed to fulfill reporting obligations.

The FIU repeatedly sent requests for cooperation to suspend transactions with overseas unregistered virtual asset operators. However, Dunamu failed to fulfill its legal obligations.

They also violated customer identification and transaction restriction obligations. In 34,477 cases, when verifying real-name identification documents such as resident registration cards, Dunamu accepted printed or copied versions instead of originals when the information could not be confirmed due to focus issues or light glare. Additionally, in 5,785 cases, customer verification was completed despite the detailed address being left blank, inaccurately entered, or containing unrelated information.

There were 354 cases where transactions were allowed without re-verification within the customer identification re-implementation period. Furthermore, despite customer risk assessments indicating concerns about money laundering activities, transactions were permitted without customer identification in 226,558 cases.

When verifying customers using driver's licenses, 189,504 cases confirmed authenticity based only on personal information without the encrypted serial number. There were also 9,066,244 cases where real-name identification documents were not requested during customer re-verification.

Dunamu failed to fulfill reporting obligations to the FIU regarding suspicious transactions of 15 users related to warrants requested by investigative agencies. Additionally, there were 2,552 cases where risk assessments for money laundering were not conducted before supporting new transactions such as NFTs (Non-Fungible Tokens).

The FIU will make a final decision on imposing fines on Dunamu, which were not included in this current action, after March. An FIU official stated, "We announced sanctions such as partial suspension of business first to promptly finalize the parts affecting new users," adding, "Fines will be decided after further deliberations in the sanction review process."