South Korea’s Financial Intelligence Unit (FIU), part of the Financial Services Commission (FSC), uncovered a staggering 500,000 to 600,000 suspected violations of Know Your Customer (KYC) requirements at Upbit, the country’s largest cryptocurrency exchange.

The discovery comes during a meticulous review of Upbit’s business license renewal application, raising concerns about potential legal and regulatory ramifications.

Potential KYC Violations on Upbit

Local media reported that according to sources within South Korea’s financial sector, the FIU’s findings were the result of an intensive inspection that began in late August. The violations pertain to lapses in Upbit’s customer verification processes, a crucial component of anti-money laundering (AML) and counter-terrorist financing (CTF) measures.

Examples of breaches include accounts being approved despite incomplete or blurred identification documents. According to the financial regulator, this could facilitate illicit activities such as money laundering.

An official from Upbit reportedly refrained from commenting on the FIU’s ongoing review, citing confidentiality clauses. However, the exchange’s operational future hangs in the balance as financial authorities verify the validity of the flagged cases. Potential fines of up to 100 million won (approximately $75,000) per violation loom.

This is not the first time Upbit has been scrutinized. South Korean authorities have consistently monitored the exchange due to its dominant position in the local crypto market. Of note is that it is the largest trading volume in the South Asian region.

As BeInCrypto reported, South Korean lawmakers recently opened an investigation against Upbit. The probe centered on the monopoly structure of the virtual asset market built around the trading platform. Similarly, listings on Upbit have been known to cause significant market fluctuations, leading to questions about transparency and fair practices.

Upbit Listings Remain Controversial

Recently, Upbit’s move to expand the Uniswap (UNI) trading pair caused a 150% volume spike for the decentralized exchange token. Similarly, the exchange’s popularity boosted Cat in a Dogs World (MEW) to a new peak, also following trading pair expansion. Other tokens that have benefited from trading activities on Upbit include Injective (INJ) and real-world asset (RWA) token Ondo Finance (ONDO).

Nevertheless, it is impossible to ignore the prevalence of South Korean traders engaging in “pump and dump” schemes, particularly for altcoins. As noted by CryptoQuant CEO Ki Yong Ju, some traders exploit Upbit’s listings to artificially inflate token prices before selling them off, leaving other investors at a loss.

“Korean crypto traders love pumping & dumping altcoins, ironically,” Young Ju noted, demonstrating with a video.

In addition, traders tend to exploit the Kimchi premium, a price gap between South Korean and overseas exchanges. While these practices are not directly linked to Upbit’s management, the exchange’s listings wield an undeniable influence on the market.

Meanwhile, even in the face of ongoing regulatory challenges, Upbit has recently taken steps to enhance transparency and user protection. In July, the exchange issued its first public disclosure under the newly enacted Virtual Asset User Protection Act. This testified to Upbit’s financial stability, user asset holdings, and risk management practices, reflecting an effort to align with changing regulatory standards.

Additionally, Upbit has made strides in global compliance. In January, it secured a Digital Payment Token Services License from Singapore’s Monetary Authority of Singapore (MAS). This milestone followed an earlier conditional approval from the same regulator. The license reflects Upbit’s commitment to regulatory adherence in international markets, even as it faces scrutiny at home.

Notwithstanding, the FIU’s findings could have far-reaching implications for Upbit, both domestically and internationally. While the financial watchdog has yet to announce definitive conclusions, the scale of potential violations could result in hefty fines.

Furthermore, besides reputation damage, the case may prompt broader discussions about KYC practices and regulatory compliance across South Korea’s growing crypto sector. Upbit’s influence as a market leader makes its actions particularly significant. Beyond dominating South Korea’s trading volume, Upbit also shapes trends and token adoption rates.

Elon Musk named Microsoft and other defendants in his ongoing lawsuit against OpenAI. In court documents, Musk claimed that OpenAI sought to launch a cryptocurrency in 2018, which he rejected.

OpenAI representatives posted years-old correspondence with Musk, citing his full knowledge of their struggle to fund massively capital-intensive research.

Elon Musk vs OpenAI

In the latest court filing, Elon Musk named several new defendants in his ongoing suit against the prominent artificial intelligence firm OpenAI. Musk names former OpenAI associates and investors in this amended complaint, including Microsoft. He accused the company of abandoning its nonprofit focus, which was a major reason behind Musk’s initial investment.

Since OpenAI abandoned its nonprofit status, the firm has publicly sought to reach a valuation of $150 billion. This would be a staggering net worth for any company, even one that aims to reform the whole tech industry.

Also, according to court documents provided by Musk’s legal team, OpenAI first tried to launch an ICO in 2018:

“In January 2018, mere months after their September 2017 ‘enthusiasm,’ Altman proposed a scamworthy ‘ICO,’ or initial coin offering, that would have seen OpenAI, Inc. sell its own cryptocurrency. Musk shot down this idea too, stating ‘it would simply result in a massive loss of credibility for OpenAI and everyone associated with the ICO,’” Musk’s team claimed.

In other words, Musk’s lawyers are claiming that OpenAI founder Sam Altman has always prioritized making money over the public good. Musk claims he only joined the project to run it as a nonprofit and then left over this philosophical difference. The company has generated huge revenues since going public, receiving $6.6 billion in funding this October.

However, the firm strongly disputed these allegations. This March, the firm published prior correspondence between Musk and company executives, stretching back nearly nine years.

In these talks, OpenAI members stressed the capital-intensive nature of AI development and stated that a profit-seeking pivot would be “inevitable.” In other words, Musk had known of this for years.

“We’re sad that it’s come to this with someone whom we’ve deeply admired—someone who inspired us to aim higher, then told us we would fail, started a competitor, and then sued us when we started making meaningful progress towards OpenAI’s mission without him,” the company’s statement read.

As of yet, the lawsuit’s prospects of success seem very unclear. Musk previously dropped this lawsuit in July, before opening it again and naming new plaintiffs. This attack may be an attempt to cause a headache for OpenAI, rather than win a large settlement or substantially change the company’s business trajectory.

The second week of November 2024 has seen a surge in crypto whales’ activity, with large-scale investors strategically accumulating key altcoins amid improving market conditions. As the cryptocurrency market experiences heightened volatility, these substantial transactions could indicate a shift in sentiment or anticipation of better price performance.

The altcoins are drawing significant whale interest from established favorites to emerging tokens, highlighting diverse strategies among high-networth investors. That said, the top altcoins crypto whales bought include Dogecoin (DOGE), Litecoin (LTC), and Ripple (XRP).

Dogecoin (DOGE)

Dogecoin is one of the altcoins that crypto whales bought this week. This development could be linked to the bullish sentiment around the coin since Donald Trump approved Elon Musk’s proposed Department Of Government Efficiency department for the incoming US administration.

On November 8, the large holders’ netflow showed a negative reading, indicating that whales sold. This metric tracks the number of coins bought or sold by large investors. As of this writing, the same metric has increased to 1.72 billion. 

At Dogecoin’s current price, this figure indicates that crypto whales purchased about $636 million DOGE this week. This accumulation has also affected the coin’s value. In the last seven days, DOGE’s price has increased by 85% and surpassed the market cap of XRP. 

Should whales continue to buy, Dogecoin could rally higher than $0.37 in the coming week. If that does not happen, the cryptocurrency might remain range-bound and trade sideways.

Litecoin (LTC)

Litecoin is another altcoin that crypto whales bought this week. On November 11, 6.33 million LTCs were held by addresses that owned between 1 million and 10 million coins.

At press time, it has risen to 7.57 million, indicating that crypto whales purchased about $106 million worth of Litecoin in the second week of November 2024. Like DOGE, the accumulation has also impacted the altcoin’s value.

Over the last seven days, Litecoin’s price has increased by 20% and currently trades at $85.87. If whale accumulation continues, then LTC could get close to $100. On the flip side, if they decide to return to the sidelines, the price might decrease. 

Ripple (XRP)

Lastly, crypto whales also purchased Ripple (XRP) in large volume this week. This large accumulation could be linked to Robinhood’s decision to list the token as the US market seeks to gain regulatory clarity on cryptocurrencies. Further, the speculation that SEC Chair Gary Gensler could resign also spurred the accumulation. 

For instance, on November 12, the XRP held by the 1 million to 10 cohort was 3.82 billion. On the same day, the 10 million to 100 million cohort held about 6.79 billion XRP. But at the time of writing, the figures have climbed to 3.97 billion and 6.95 billion, respectively. This means that crypto whales purchased a combined 310 million tokens, valued at around $267 million.

As a result, XRP’s price increased by 56% within the past week while trading at $0.87. Should whales continue to pour money into it, the price could close in on $1. If not, it could experience a drawdown.