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- South Korea fines Bithumb $24.8M over 6.59M failed identity checks and AML violations.
- Bithumb processed 45,000 transactions with 18 unregistered overseas crypto platforms.
- FIU orders a six-month partial suspension and reprimands the Bithumb CEO over compliance lapses.
South Korea’s Financial Intelligence Unit (FIU) has imposed a 37 billion won ($24.8 million) fine on Bithumb, the country’s largest cryptocurrency exchange. Regulators said the platform failed to verify user identities and processed transactions with unregistered foreign crypto services.
The FIU, which operates under the Financial Services Commission, said Bithumb violated anti-money laundering requirements. Investigators found about 6.59 million cases where customer identity checks were not properly completed. Officials said this breached rules that require exchanges to confirm user identities before allowing trading activity.
Authorities also discovered that the exchange handled transactions linked to 18 overseas crypto platforms that lacked registration in South Korea. According to the FIU, Bithumb processed around 45,000 transactions involving these unapproved services.
Bithumb Given 10 Days to Respond Before Penalties Finalized
Regulators said the violations warrant financial penalties and business restrictions. The enforcement action includes a six-month partial suspension of certain operations. Officials also confirmed that Bithumb’s chief executive will receive an official reprimand.
The FIU has given the company 10 days to submit a response before the decision becomes final. The agency will review the explanation before confirming the sanctions.
South Korean law requires cryptocurrency exchanges to follow strict identity verification standards. Platforms must connect users to real-name bank accounts issued by domestic financial institutions. Exchanges must also report large transactions and suspicious activity to authorities.
Failure to meet these obligations can lead to fines or operational limits. Regulators say these rules are designed to prevent money laundering and illegal financial activity in digital asset markets.
The case against Bithumb follows enforcement action taken last year against Dunamu Co., operator of the Upbit exchange. During a government inspection, regulators identified more than 8.6 million violations of financial rules tied to the platform.
South Korea Tightens Rules After Upbit Compliance Violations
The authorities also found that 5.3 million cases involved weak verification of identities, with registrations involving unclear or scanned identification documents. In addition, 3.3 million transactions were completed before verification was completed.
The FIU also noted that Dunamu did not report suspicious transactions, despite requests from prosecutors. A fine of 35.2 billion won was also imposed on Upbit by the regulators.
The authorities in South Korea are also looking to implement changes to the policies governing the crypto market. There are proposals to restrict the share of major shareholders in crypto companies to 20%. There is also the possibility of allowing exemptions to allow up to 34%.
Authorities said there are also proposals to restrict corporate investment in stablecoins like USDT and USDC. This is due to existing forex regulations. There will be no relaxation in regulations for crypto exchanges.
Also Read: TRON Enables Autonomous AI Finance Through Stablecoins and DeFi Ecosystem Tools
