South Korea’s crypto landscape is heating up as Dunamu, the powerhouse behind the nation’s leading crypto exchange, Upbit, is reportedly battling back against regulatory pressures. The company has taken legal steps to challenge a business suspension order issued by the country’s Financial Intelligence Unit (FIU).

This move unfolds as South Korean authorities are clearly signaling a firmer stance on digital asset crime, recently establishing a specialized unit designed to tackle the increasing complexities of crypto-related investigations.

Upbit challenges FIU

In a significant move reported on February 28th, Dunamu reportedly initiated a lawsuit at the Seoul Administrative Court. The aim? To overturn the sanctions imposed by the FIU, signaling a direct confrontation with the regulatory body.

The heart of the issue stems back to last November when South Korean regulators raised concerns about Upbit’s customer due diligence processes. They pointed to what they deemed failures in properly vetting customers in a staggering number of cases – reportedly hundreds of thousands.

As a result of these alleged shortcomings, the FIU clamped down by restricting Upbit from onboarding new users for virtual asset transfers between March 7th and June 6th. This was a clear blow to the exchange’s operational capabilities.

However, Dunamu isn’t backing down. They’ve formally challenged the FIU’s decision, arguing that such a penalty will deliver a substantial hit to their business operations. The stakes are clearly high for the crypto giant.

In their defense, Dunamu maintains they have proactively addressed regulatory concerns by implementing the necessary compliance measures. They firmly believe the FIU’s sanctions are unduly harsh, suggesting a mismatch between the alleged infractions and the severity of the punishment. Furthermore, Dunamu contends that the FIU reached its decision without a comprehensive understanding of all the pertinent facts and circumstances.

Dedicated crypto unit

Adding another layer to the evolving crypto regulatory environment, South Korea’s Seoul Southern District Prosecutors’ Office has announced the launch of a dedicated Joint Investigation Unit (JIU). This specialized team is specifically geared towards combating the rising tide of cryptocurrency-related crimes, as highlighted in a local media report on February 27th.

According to the report, this newly formed unit brings together 35 experts, including financial regulators and seasoned prosecutors from both the Financial Services Commission and the Financial Supervisory Service. Their core mission will be to aggressively investigate and prosecute cases involving crypto fraud, theft, and other forms of illicit activities within the digital asset markets.

This proactive step by authorities comes on the heels of a successful temporary task force established in 2023. That inital team proved effective in tackling the growing problem of crypto-related offenses. The surge in both the volume and sophistication of these crimes has now necessitated a permanent, specialized unit to ensure sustained and more effective law enforcement in this rapidly changing space.

The impact of the initial task force is already evident. Since its inception, prosecutors have pressed charges against 74 individuals and made 25 arrests, all linked to cases involving elaborate fraudulent schemes and market manipulation within the crypto world.