South Korea’s top cryptocurrency exchange, Upbit, has been slapped with a three-month ban on servicing new clients, following regulatory action by the country’s Financial Intelligence Unit (FIU). The sanctions, announced on Feb. 25, temporarily block new users from depositing or withdrawing cryptocurrencies on the platform.

The FIU stated that the suspension was imposed due to Upbit’s failure to comply with regulations prohibiting transactions with unregistered crypto asset service providers (CASPs). This marks one of the strongest enforcement actions taken against a major exchange in South Korea.

In response, Upbit issued a public apology, acknowledging the restrictions and expressing regret over the inconvenience caused to users. The company stated that it had already implemented necessary compliance measures and is in discussions with regulators regarding potential modifications to the sanctions.

Upbit emphasized that existing customers will continue to have full access to trading and withdrawal services. However, the company also suggested that the FIU’s decision could be revised, pending further review of specific circumstances. If adjustments are made, new users may regain access sooner than expected.

This regulatory setback follows an earlier warning from the FIU in January about possible punitive measures related to Know Your Customer (KYC) violations. In November 2024, authorities accused Upbit of up to 600,000 breaches in client verification procedures, signaling growing scrutiny over compliance failures in the crypto sector.

The impact on Upbit has been severe, with daily trading volumes plummeting by 70% since January, now standing at $4.6 billion. As one of South Korea’s largest exchanges, Upbit’s fate could set a precedent for how regulators handle compliance enforcement in the country’s crypto industry.