A South Korean court has struck down a regulatory sanction imposed on Dunamu, the company behind cryptocurrency exchange Upbit, ruling in favor of the firm in its legal challenge against the country’s financial watchdog. The Seoul Administrative Court sided with Dunamu in its lawsuit against the Financial Intelligence Unit (FIU), overturning a three-month partial business suspension that had been tied to alleged anti-money laundering violations. The decision was reported by Yonhap News Agency on Tuesday.
The court found that while clear rules existed for transactions exceeding 1 million won (approximately $675), regulations governing smaller transfers lacked sufficient specificity. This gap in regulatory clarity weakened the legal foundation for the FIU’s enforcement action against Dunamu. The ruling effectively narrows the FIU’s authority to impose major sanctions on crypto exchanges where the underlying compliance standards have not been clearly defined in practice.
On the question of whether Dunamu had taken adequate compliance measures, the court noted that the FIU had not provided specific guidance outlining what actions were actually required of the exchange. Given that absence of direction, the court determined that Dunamu had nonetheless implemented its own measures. The court added that even if those steps appear insufficient in retrospect, it could not conclude that the company had failed its obligations through intent or gross negligence.
The FIU had originally imposed the partial suspension on February 25, 2025, following an on-site inspection of Dunamu’s operations. The regulator alleged that the exchange had facilitated transactions with unregistered overseas virtual asset providers and failed to meet customer due diligence requirements. The FIU also stated it had identified more than 600,000 suspected Know Your Customer violations during a review of Upbit’s exchange business license.
Dunamu moved quickly to contest the penalty, filing a lawsuit and requesting an injunction to halt enforcement shortly after the sanction was announced. On February 28, 2025, the company confirmed it had submitted its case seeking to overturn the partial suspension order. The court granted that injunction on March 27, 2025, allowing Upbit to continue onboarding new users while the legal challenge remained under review.
The final ruling brings to a close a dispute that had cast uncertainty over Upbit’s operations and raised broader questions about the regulatory framework governing crypto exchanges in South Korea. By overturning the sanction, the court has signaled that regulators must provide clear and specific compliance guidance before penalizing firms for failing to meet standards that were not explicitly established. The decision may have wider implications for how the FIU approaches enforcement actions against other virtual asset service providers in the country.
Originally reported by CoinTelegraph.
