Moving to Overturn First Ruling... FIU's Appeal Kicks Off Round 2 of Upbit Dispute

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As financial authorities appealed against the ruling to revoke Dunamu's sanctions, 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 had ruled in favor of the plaintiff in a lawsuit filed by Dunamu to revoke a 3-month partial business suspension.

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

However, the first-instance court focused on Dunamu's responsive measures. It acknowledged that Dunamu had taken post-management steps, 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 these actions were intentional or grossly negligent. Consequently, the authorities' sanctions were concluded to lack reasonableness.

Industry observers interpret this ruling as a partial recognition 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 the criteria for judging similar cases in the future.

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 a complete ban on such transactions. The outcome of this case, which has the nature of a precedent, is expected to have a significant impact on related lawsuits involving other exchanges such as Bithumb and Coinone.

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