Tax and KYC Issues Plague Upbit’s Foreign Withdrawals, Exchange Says

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South Korean crypto exchange Upbit has announced the continuous ban for its foreign users from withdrawing their funds due to tax and KYC issues.

A Jinse report said that many Chinese Upbit users are finding it difficult to withdraw Korean Won ever since December. Upbit has announced to its foreign users the reasons their withdrawals are still restricted on Feb. 19  in an announcement. 

Upbit said in the announcement that (Know Your Customer) KYC and Korean taxation on cryptocurrency among crypto exchanges are the two main reasons behind the restriction.

Long wait for the KYC process

Since mid-December in 2019, Upbit has enhanced its KYC process and had turned in all the required documentation and lifted the restriction on the foreign members who have completed the KYC process, according to the announcement

Yet, the exchange said after hearing reports about more exchange taxation at the end of December, they started to look into the possibility of taxation internally, which continues to delay foreign withdrawals. Upbit added that: 

“Upbit has been working closely with the tax authority to ensure accurate taxation standards, and also with tax experts to review taxation standards by country.”

Chinese users don’t buy it

According to Jinse’s report, many users in China and elsewhere are looking to bring Upbit to account.  Many also believe that the current restriction for withdrawing has nothing to do with tax but rather, that Upbit is in serious financial trouble. A lawyer close to Upbit told Jinse that Upbit representatives tried to use 20% of the withdrawal amount of foreign users as collateral for subsequent tax replenishment.”

Security issues are not new 

Upbit suffered a major hack in November 2019, totaling 342,000 ETH valued at approximately $50 million at the time, Cointelegraph reported.  Even after its recent security updates, it looks like foreign users will still see tough times for now.