- South Korea’s FIU proposes a 6‑month partial Bithumb suspension, fines up to 50B won.
- Investigation finds lax KYC, weak transaction tracking, and unlicensed deals.
- The CEO got an official reprimand, and the company’s compliance officer could be removed.
South Korean regulators are moving to suspend part of Bithumb’s operations, marking one of the toughest crackdowns the exchange has ever faced.
South Korea’s Financial Intelligence Unit (FIU) has dropped a preliminary notice proposing a six-month suspension of some Bithumb services, plus possible fines that could hit 50 billion won (roughly $36.5 million).
The investigation flagged a number of issues, including lax KYC checks, poor tracking of shady transactions, missed suspicious activity reports, and deals with unlicensed overseas crypto firms.
The crackdown also hit leadership, as Bithumb’s CEO got an official reprimand and the company’s compliance officer could potentially be removed.
If the penalty sticks, new users wouldn’t be able to move crypto out of the exchange, though existing customers could still trade and withdraw. A sanction committee will hash out the final decision later in March.
This comes after a series of high-profile incidents that had already put the exchange under a microscope.
For instance, back in February, a Bithumb employee accidentally typed “BTC” instead of Korean won during a promo, briefly crediting users with 620,000 Bitcoin. This created billions in fake assets and rattled the market before the exchange recovered most of it.
Earlier investigations had already flagged weak systems and operational slip-ups, pushing regulators to dig deeper into how the exchange runs things behind the scenes.
Tightening Crypto Regulation in South Korea
South Korea is one of the world’s largest crypto trading markets and has been steadily tightening regulatory supervision on exchanges for a while now.
The country introduced the Virtual Asset User Protection Act in 2024, which brought some strict rules, such as reserve checks, AML compliance, and live transaction monitoring.
Since these rules have been introduced, regulators haven’t shied away from enforcing them. Upbit and other exchanges have already been hit with fines and suspensions over similar AML issues.
Officials say the tougher stance is meant to improve investor protection and market stability, especially after certain previous industry failures, such as the collapse of Terra (LUNA), which originated in South Korea and caused billions in losses globally.
Related: South Korea to Enforce 20% Ownership Cap on Crypto Exchanges
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