The Seoul Administrative Court has annulled a three-month partial business suspension and a 35.2 billion won ($23.8 million) fine imposed by South Korea's Financial Intelligence Unit (FIU) on Dunamu, the operator of the Upbit cryptocurrency exchange. The ruling, delivered by the court's 5th Division, concludes a legal battle that lasted over a year.
The court found that while clear anti-money laundering (AML) regulations existed for transactions exceeding 1 million won (approximately $675), the rules for smaller transfers were not sufficiently specific. This lack of regulatory precision undermined the legal basis for the FIU's sanction, which was imposed on February 25, 2025. The FIU had alleged that Upbit facilitated 44,948 transactions with 19 unregistered foreign virtual asset providers during a 2024 inspection and identified over 600,000 alleged violations of Know Your Customer (KYC) rules.
The court determined that Dunamu had taken reasonable compliance measures, including sending confirmation letters to customers, using Chainalysis Korea's monitoring system to block suspicious wallet addresses, and implementing self-monitoring procedures. Judges noted that only 0.7% to 2.8% of transactions flagged as 'Unknown' by external systems were later confirmed to involve unregistered businesses, concluding that this "does not immediately constitute intentional wrongdoing or gross negligence."
This precedent-setting ruling could influence pending cases against other major South Korean exchanges. Bithumb is currently litigating a six-month partial suspension and a 36.8 billion won ($25 million) fine on similar charges, while Coinone has received advance notice of sanctions including a three-month suspension.
In a separate but related development, Bithumb is engaged in litigation to recover approximately 7 BTC remaining from a massive operational error in February. During a promotional "random box" event, a staff member mistakenly paid out 620,000 Bitcoins (worth approximately 62 trillion won or $40 billion at the time) instead of 620,000 won to 249 winners. The exchange detected the error within 35 minutes, froze accounts, and has recovered 99.7% of the Bitcoin. Some customers have refused to return funds, arguing it was the company's mistake. Legal experts state that customers are likely to lose in court as the Bitcoin is "subject to the return of unjust enrichment."
Following the Bithumb incident, South Korea's Financial Services Commission has mandated that all cryptocurrency exchanges reconcile their internal records with actual asset holdings every five minutes by the end of May 2026.
