Moves to Overturn First Ruling... Upbit Dispute Enters Round 2 with FIU Appeal

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As financial authorities disagreed with the ruling to revoke Dunamu's sanction and proceeded with an appeal, the regulatory dispute surrounding Upbit has expanded to the second instance.

According to legal circles on the 30th, the Financial Intelligence Unit (FIU) under the Financial Services Commission officially challenged the first instance ruling by submitting an appeal to the Seoul Administrative Court today. Previously, the court ruled in favor of the plaintiff in a lawsuit filed by Dunamu to revoke a three-month partial business suspension.

This matter began when the FIU detected violations of the Specific Financial Transaction Information Act by Dunamu and some of its employees in February last year and notified them of a partial business suspension. At the time, authorities raised issues with transactions involving unregistered overseas virtual asset service providers and violations of customer verification obligations.

However, the first instance court focused on Dunamu's responsive measures. The court acknowledged that Dunamu engaged in post-management, such as collecting customer affidavits and operating a transaction monitoring system to block transactions with unregistered service providers, and determined that it was difficult to conclude this as intentional or grossly negligent. Consequently, the authorities' sanction was concluded to lack rationality.

The industry interprets this ruling as an acknowledgment, to some extent, of Dunamu's internal control system and risk response capabilities, which operates Upbit. In particular, the court's distinction between 'sufficiency of measures' and 'determination of intent' is likely to influence future judgment standards for similar cases.

In the second instance, key issues are expected to be whether there was intent or gross negligence in Dunamu's transactions with overseas service providers, and whether authorities provided clear implementation guidelines regarding the full prohibition of transactions. The outcome of this case, which serves as a precedent, is expected to have a significant impact on related lawsuits involving other exchanges such as Bithumb and Coinone.

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