Upbit Returns $6M to Scam Victims, Faces Regulatory Challenges as It Seeks to Renew Operating License

South Korean cryptocurrency exchange Upbit has taken a commendable step by returning over $6 million (8 billion KRW) to 380 victims of telecom fraud.

South Korean cryptocurrency exchange Upbit has returned over $6 million (8 billion KRW) to 380 victims of telecom fraud, as part of a broader effort to combat illicit activities that often target digital assets trading platforms.

The recovered funds stemmed from fraudulent activities that exploited Upbit’s services, with perpetrators targeting users through schemes linked to telecom scams.

Highlighting the many ways in which users can fall victim to telecom fraud on its website, Upbit is creating awareness to protect users against malicious actors. Those who had already fallen victim to these scams have been reimbursed.

According to a November 22 report by Ajunews, the company sought the help of South Korean law enforcement and financial authorities including the Seoul Metropolitan Police to facilitate the return of the funds.

Additionally, the exchange worked with Dunamu, another South Korean crypto firm to speed up the refund. According to Ajunews, Dunamu implemented its real-time abnormal transaction monitoring system (FDS) to freeze compromised funds.

This marks the second time that Upbit has refunded scam victims this year. In February, the company returned approximately $5 million to 246 users who lost their funds to scammers.

Despite its efforts to create a safer environment for its users by actively combating fraud, the company is not without issues. In 2019, Upbit suffered a major cybersecurity attack that resulted in the loss of 342,000 Ethereum (ETH) , then valued at around $50 million. Currently, the stolen funds are worth over $1.1 billion at market prices.

On Thursday, Coinspeaker reported that South Korean authorities have finally identified the perpetrators to be the notorious North Korean hackers Lazarus Group in conjunction with Andariel, as the masterminds behind the theft.

The law enforcement worked together with the United States Federal Bureau of Investigation (FBI) to uncover the hackers.

In other news, Upbit is under investigation by South Korean authorities for alleged lapses in adhering to know-your-customer (KYC) requirements. Reports indicate that the exchange failed to authenticate the identities of a substantial number of accounts, sparking concerns about its compliance with anti-money laundering (AML) laws.

This scrutiny coincides with Upbit’s efforts to secure the renewal of its operating license, a vital credential for maintaining its dominance in South Korea’s competitive cryptocurrency market. If the alleged violations are proven, Upbit could face steep fines of up to 100 million won (around $71,740) per infraction, potentially leading to significant financial repercussions.

Moreover, these regulatory concerns threaten to complicate the renewal process for the exchange’s license, which is essential for its continued operations.