Key Highlights
- Bithumb faces a fine of 37 billion won (about $24.8M) and 6-month suspension for failing identity checks and unregistered trades.
- South Korea cracks down on crypto AML, following last year’s Upbit violations and heavy fines.
- Regulators plan shareholder limits and stablecoin restrictions to tighten digital asset oversight.
South Korea’s biggest exchange Bithumb has been hit with a 37 billion won (~$24.8 million) fine and a six-month partial suspension. The Financial Intelligence Unit (FIU), part of the Financial Services Commission, said the exchange failed to properly verify user identities and carried out transactions with unregistered foreign partners.
The FIU stated that Bithumb neglected identity verification in roughly 6.59 million cases. Moreover, the exchange facilitated approximately 45,000 transactions with 18 overseas platforms that lacked proper registration. The agency also confirmed that Bithumb’s CEO will receive an official reprimand.
However, the FIU has given Bithumb 10 days to respond before finalizing the penalties.
Cryptocurrency exchanges in South Korea must verify customer identities using real-name accounts tied to domestic banks. They must also report any transactions above certain thresholds. Failure to comply risks fines, business restrictions, or government scrutiny.
Broader context of AML enforcement
Bithumb’s fine echoes last year’s crackdown on Dunamu Co., the operator of Upbit. During a government inspection, the FIU found more than 8.6 million violations of financial rules. About 5.3 million of these were linked to sloppy identity checks, including registrations with blurry, unclear, or scanned ID documents.
Also, 3.3 million transactions were found to have been processed before verification was complete. There were also cases where Dunamu did not report suspicions, even when asked to do so by prosecutors. The FIU imposed a fine of 35.2 billion won on Upbit.
Upcoming regulatory reforms
South Korea is also moving to reshape the rules for its digital asset market. Lawmakers and regulators recently proposed limiting major shareholders’ stakes in crypto companies to 20%, though exceptions could allow up to 34%. The goal is to prevent a few individuals from controlling exchanges while keeping operations flexible.
At the same time, the Financial Services Commission plans to block companies from investing in stablecoins like USDT and USDC. Officials say this follows existing foreign exchange laws, which do not recognize stablecoins as legal foreign payments. Some limited changes to allow certain stablecoin payments are still under review.
South Korea is sending a clear message that crypto exchanges must follow stricter rules. Companies now need to improve how they verify users, monitor transactions, and report suspicious activity. Ignoring these requirements could lead to fines, temporary shutdowns, or even warnings for top executives.
Also Read: Australia Moves to Regulate Crypto Platforms With New Licensing Rules
