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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] SEOUL — Bithumb, one of South Korea’s largest cryptocurrency exchanges, has been hit with a staggering 36.8 billion KRW (approx. $26.5 million) fine and a six-month partial business suspension. The Financial Intelligence Unit (FIU), under the Financial Services Commission, finalized the sanctions on the 16th following a probe that uncovered millions of violations of the Act on Reporting and Using Specified Financial Transaction Information (Special Financial Transactions Act).
Massive Scale of Violations
The FIU’s inspection, conducted between March and April of last year, revealed approximately 6.65 million instances of non-compliance. Key violations include:
Unregistered Overseas Transfers: Over 45,000 transactions were facilitated with 18 unregistered foreign virtual asset service providers (VASPs). Bithumb reportedly ignored three formal requests from the FIU to cease these specific trades.
Failure in Customer Due Diligence (CDD): The exchange processed "verification complete" status for users with incorrect addresses and failed to perform enhanced due diligence on high-risk customers.
Transaction & Record-Keeping Breaches: Bithumb allowed trades for unverified users (304 cases) and failed to preserve copies of real-name identification for over 16,000 customers.
Impact on Operations (March 27 – Sept 26)
During the six-month partial suspension, new customers at Bithumb will be prohibited from transferring virtual assets to or from external wallets. However, basic services such as:
Trading and exchanging cryptocurrencies
KRW deposits and withdrawals
Services for existing customers
...will remain operational without restrictions.
Executive Accountability
The fallout extends to leadership, with the CEO receiving a "reprimand warning" and the head of reporting facing a six-month suspension. This marks one of the most severe disciplinary actions ever taken against a major Korean exchange, signaling the government's zero-tolerance policy toward money laundering loopholes in the digital asset space.
The FIU plans to finalize the fine after a 10-day period for Bithumb to submit an official opinion. As Bithumb prepares for a potential IPO, this regulatory blow is expected to complicate its valuation and institutional trust in the short term.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
