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- South Korean regulators issued advance notice of major sanctions against Bithumb for anti-money laundering failures.
- Authorities proposed a six-month partial business suspension and disciplinary action against the CEO.
- The restrictions may affect only new users while existing customers continue normal trading.
South Korean financial regulators intensified scrutiny on local crypto exchanges. Authorities recently delivered advance notice of sanctions against Bithumb, one of the country’s largest digital asset trading platforms. The proposed penalties include a six-month partial suspension of business operations and disciplinary measures against the company’s chief executive.
The action comes after an investigation by the Financial IntelligenBithumb Faces Possible 6-Month Suspension as South Korea Targets AML Violationsce Unit, which operates under the Financial Services Commission.
The regulator examined Bithumb’s compliance with the Specific Financial Information Act, which regulates anti-money laundering practices for virtual assets in South Korea. There were some compliance issues identified by investigators.
Regulators Flag Unreported Overseas Transactions
They highlighted transactions between Bithumb and overseas digital asset operators that had not filed required reports with South Korean authorities. Regulators also pointed to weaknesses in customer identity verification and due diligence checks.
These measures form the core of anti-money laundering programs that exchanges must follow. Officials concluded that the exchange did not maintain adequate monitoring systems. The FIU therefore prepared disciplinary measures and sent the preliminary notice to the company.
The proposed penalty structure limits certain services rather than halting the entire platform. Authorities designed the restriction to focus mainly on new customers.
Under the proposal, the exchange could face a six-month ban on virtual asset transfers for newly registered users. New members would not be able to move digital assets out of the platform during the suspension period, while existing customers would remain mostly unaffected.
Current users could still deposit and withdraw Korean won and continue trading cryptocurrencies without interruption. This action follows similar steps taken against other exchanges, as regulators seek to enforce compliance while avoiding disruption in the wider digital asset market.
South Korea Reviews Possible Sanctions Against Bithumb
The possible sanction against Bithumb forms part of a wider regulatory effort to strengthen oversight of crypto trading platforms in South Korea. Last year authorities punished Dunamu, the operator of Upbit, for similar violations.
Regulators imposed a three-month partial suspension of operations and a fine of 35.2 billion won. Other exchanges have also faced penalties. Authorities fined Korbit 2.73 billion won earlier this year and issued an institutional warning after identifying compliance weaknesses.
Financial authorities will now review the proposed action against Bithumb. Officials plan to convene a sanctions review committee later this month. The panel will evaluate the evidence and determine the final level of punishment. Industry observers expect additional reviews to follow.
Regulators also plan to examine compliance issues involving Coinone and GOPAX. Bithumb stated that the current notice does not represent a final decision. Company representatives said the review process could adjust the scope of the penalties before regulators issue the final ruling.
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