Dunamu, the operator of the cryptocurrency exchange Upbit, won the first trial in an administrative lawsuit seeking to overturn a three-month partial business suspension imposed by the Financial Intelligence Unit (FIU). The court said it was hard to conclude that Dunamu took no measures at all to block transactions with unregistered overseas virtual asset service providers, and found that the regulatory standards were particularly unclear for transactions under 1 million won.
The Administrative Division 5 of the Seoul Administrative Court (Presiding Judge Lee Jeong-won, senior judge) on the 9th ruled in favor of the plaintiff in Dunamu's suit seeking to cancel the partial business suspension imposed by the FIU. The case began when the FIU in Feb. last year notified Dunamu and its executives and employees of sanctions for violating the Act on Reporting and Using Specified Financial Transaction Information.
The issue was whether Dunamu had intent or gross negligence. The bench said, "There are clear regulatory provisions that can block transactions with unregistered virtual asset service providers for transactions of 1 million won or more, but specific regulations are lacking for amounts under 1 million won."
It added, "In a situation where the regulator did not present specific measures and guidelines the plaintiff had to implement, it can be acknowledged that the plaintiff took its own measures," and noted, "It is difficult to view that the plaintiff failed to take all necessary measures with intent or gross negligence merely because the measures taken were later deemed insufficient."
The disposition was imposed after the FIU determined that Upbit conducted transactions with unregistered overseas virtual asset service providers and failed to properly fulfill customer due diligence obligations. At the time, the financial authorities notified Dunamu of a partial business suspension restricting deposits and withdrawals of virtual assets by new customers for three months, along with sanctions on executives and employees.
Dunamu promptly filed the main lawsuit and a request to suspend execution. The court granted the request to suspend execution in Mar. last year, first halting the effect of the suspension, and in this ruling on the merits also sided with Dunamu.