South Korea’s largest cryptocurrency exchange, Upbit, has been granted a temporary lifeline after a local court overturned a regulatory ban that had blocked it from onboarding new users. The decision, revealed on March 27, pauses a three-month suspension originally imposed by the country’s Financial Intelligence Unit (FIU).

The FIU sanctioned Upbit on February 25, accusing it of processing over 45,000 transactions with unregistered overseas crypto exchanges—a direct violation of South Korea’s financial reporting laws. Additionally, Upbit faced allegations of failing to comply with Know Your Customer (KYC) requirements, with regulators uncovering up to 600,000 suspected violations during a license renewal review.

The controversy stems from a broader investigation launched by South Korea’s Financial Services Commission (FSC) in late 2023, which also examined whether Upbit breached anti-monopoly regulations. In response to the escalating scrutiny, Upbit’s parent company, Dunamu, filed a lawsuit challenging the FIU’s decision and requested an injunction to lift the suspension.

The court’s latest ruling allows Upbit to resume services for new clients until a final judgment is made. If the decision stands, it could significantly reshape regulatory dynamics in South Korea’s crypto sector.

This legal back-and-forth arrives amid South Korea’s sweeping crackdown on unregistered foreign crypto platforms. In October 2024, the government rolled out tighter regulations on cross-border digital asset transactions, requiring businesses to report such activities to prevent tax evasion and currency manipulation. As part of enforcement, 17 crypto exchange apps were delisted from Google Play, with further restrictions planned on internet access and Apple’s App Store.

Upbit’s temporary victory marks a pivotal moment in South Korea’s evolving crypto regulation landscape—and could set the tone for how aggressively the nation handles compliance in the months ahead.