Upbit Returns Over $6 Million to 380 Telecom Fraud Victims
South Korean cryptocurrency exchange Upbit returned over $6 million (8 billion KRW) to 380 victims of telecom fraud, part of a broader effort against illicit activities targeting digital asset trading platforms.
The recovered funds resulted from fraudulent schemes that exploited Upbit's services, with perpetrators focusing on telecom-related scams.
Upbit Makes Scam Victims Whole
Upbit raised awareness about various telecom fraud tactics on its website. A report by Ajunews on November 22 stated that the company collaborated with South Korean law enforcement and financial authorities, including the Seoul Metropolitan Police, to facilitate fund returns. Additionally, Upbit partnered with Dunamu to expedite refunds, utilizing its real-time abnormal transaction monitoring system (FDS) to freeze compromised funds.
This marks the second refund initiative by Upbit this year; in February, the exchange reimbursed approximately $5 million to 246 users affected by scams.
Upbit Faces Regulatory Challenges
Despite efforts to enhance user safety, Upbit faces significant challenges. In 2019, the exchange experienced a cybersecurity breach resulting in the loss of 342,000 Ethereum (#ETH), valued at around $50 million at that time. Currently, these stolen funds are worth over $1.1 billion based on market prices.
On Thursday, Coinspeaker reported that South Korean authorities identified the hackers as the North Korean group Lazarus and Andariel, with assistance from the FBI.
Additionally, Upbit is under investigation for potential violations of know-your-customer (KYC) regulations, having reportedly failed to authenticate many account identities. This raises concerns regarding compliance with anti-money laundering (AML) laws.
The scrutiny coincides with Upbit’s efforts to renew its operating license, crucial for maintaining its position in South Korea's competitive cryptocurrency market. Proven violations could lead to fines up to 100 million won (approximately $71,740) per instance, posing substantial financial risks.
These regulatory issues may complicate the license renewal process essential for Upbit's operations.