Catenaa, Tuesday, March 10, 2026- South Korea’s Financial Intelligence Unit has issued a preliminary notice proposing a six-month partial suspension of operations for the cryptocurrency exchange Bithumb over alleged violations of anti-money laundering regulations.
The notice also includes disciplinary action against Bithumb chief executive Lee Jae-won, according to local reports released Monday. Authorities said the penalties stem from compliance failures tied to customer verification and transactions involving overseas crypto operators not registered in South Korea.
If confirmed, the measure would restrict virtual asset transfers and withdrawals for newly registered users while allowing existing customers to continue trading and moving funds on the platform.
Regulators said the exchange failed to follow customer due diligence procedures required under the Act on Reporting and Using Specified Financial Transaction Information, which governs anti-money laundering compliance for crypto platforms operating in the country.
The enforcement notice follows an investigation launched by the Financial Supervisory Service in February after a major operational error raised concerns about Bithumb’s internal risk management.
During a promotional event, the exchange mistakenly credited users with cryptocurrency instead of Korean won. The error resulted in the accidental transfer of roughly 620,000 BTC, far exceeding the company’s actual holdings.
At current market prices near $70,000 per coin, that amount would represent more than $40 billion in digital assets. The incident triggered scrutiny from regulators and lawmakers over safeguards used by the exchange.
Authorities said the case exposed weaknesses in Bithumb’s internal monitoring systems and reconciliation processes. Executives later confirmed that the exchange reconciles digital asset balances with internal records once per day.
South Korea maintains one of the strictest regulatory environments for cryptocurrency trading. The government requires exchanges to register with financial authorities and comply with strict anti-money laundering and identity verification standards.
The latest action against Bithumb forms part of a wider enforcement effort targeting compliance gaps across the country’s crypto industry.
In November 2025, regulators imposed a three-month partial suspension and a 35.2 billion won fine on Dunamu, the operator of the exchange Upbit.
Another platform, Korbit, received a regulatory warning and a fine of about 2.73 billion won over similar issues involving customer verification procedures and overseas crypto transactions.
Together with Upbit and Korbit, Bithumb accounts for a large share of South Korea’s digital asset trading market. Industry trackers estimate the country handles billions of dollars in cryptocurrency trading volume each day.
South Korea has emerged as one of the most active cryptocurrency markets in Asia. Retail investors play a major role in trading activity, particularly in bitcoin and major alternative digital tokens.
Authorities say tighter supervision aims to protect local investors and prevent illicit financial activity linked to digital assets.
Financial regulators plan to convene a sanctions review committee later this month to determine the final penalty against Bithumb.
Officials said the current notice represents a preliminary step and could be modified after the review process.
Market observers say the decision could influence how exchanges across Asia strengthen compliance systems and risk controls.
