In a notable event in the South Korean crypto industry, a court overturned the Financial Intelligence Unit (FIU) order for Upbit suspension. The ruling brings relief to Dunamu, the operator of the country’s largest cryptocurrency exchange, and highlights important questions about regulatory clarity in anti-money laundering (AML) compliance.
The Seoul Administrative Court sided with Dunamu on Tuesday, overturning the FIU’s three-month partial business Upbit suspension.
According to local reports from Yonhap News Agency, the decision stems from a lawsuit filed by Dunamu against the regulator over alleged AML violations. The resolution marks the end of a legal battle that began at the onset of 2025.
Court Emphasizes Need for Specific Guidance in Upbit Suspension Case
The judges observed that, although there were well-defined criteria for financial transactions exceeding 1 million won (about $675), there were no well-defined rules for financial transactions below that amount.
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It made things difficult for the FIU while implementing the decision to suspend Upbit. It is clear from this case that without well-established standards to comply with, it is difficult to enforce strict penalties. This is indeed a fair way to go about things so that companies are not penalized for vague guidelines.
The Upbit suspension was initially ordered on February 25, 2025. The FIU restricted new users on the platform from transferring digital assets after an on-site inspection revealed issues. These included transactions with unregistered overseas virtual asset service providers (VASPs) and shortcomings in customer due diligence.
Moreover, the regulator had pointed out more than 600,000 suspected Know Your Customer (KYC) violations in its assessment of Upbit’s activities. In turn, the defendant promptly contested the ruling, initiating legal action to halt the Upbit suspension through the issuance of an injunction.
After just a few days, on February 28, 2025, the defendant officially petitioned for the annulment of the partial suspension decision. The court issued an injunction on March 27, 2025, enabling the exchange to register new customers despite the ongoing legal process.
In rebuttal to the FIU’s arguments regarding insufficient measures by Dunamu, the court emphasized that no detailed instructions were given by the regulator.
However, it appears that Dunamu developed its own system of monitoring and acquired commitments from customers not to engage in any transactions with doubtful parties.
As a result, even though such measures may seem inadequate in retrospect, it was difficult for the judges to argue about the intentions or gross negligence of the company. Without these factors, the case for suspending operations at Upbit became much weaker.
In conclusion, the ruling makes it clear that to be able to impose substantial penalties, the Financial Intelligence Unit should make sure that its regulations are unambiguous enough. Otherwise, the chances of obtaining such a decision will become slim.
At the same time, the case illustrates the need for taking precautionary measures on the part of exchanges. Indeed, Dunamu was responsible enough to develop internal controls.
For users of Upbit, there is no reason to worry anymore since they are no longer under the shadow of the Upbit suspension.
The case also occurs at a time when there were other regulatory actions concerning other crypto exchanges in South Korea, such as Bithumb. In particular, Dunamu has won an unprecedented case and proved how the court may help in curbing regulatory overreach where regulatory guidelines fail.
Thus, the conclusion of this case should bring nothing but benefits both for Upbit and Dunamu, as well as the whole crypto industry in South Korea. The reason is that it helps to ensure more fair regulation, which finds a balance between consumers’ rights and business interests.
Undoubtedly, crypto market players will continue to monitor what FIU decides to do and whether it will pursue an appeal, change something in its AML procedures, etc. However, it should be acknowledged that, in any case, the cancelation of Upbit suspension is a good sign for crypto exchange operators.
