South Korea's financial regulator has imposed a six-month partial suspension of operations and 36.8 billion won ($25.3 million) in fines on cryptocurrency exchange Bithumb for violations of anti-money laundering obligations.
The Financial Intelligence Unit (FIU) under the Financial Services Commission announced Monday that its sanctions review committee had also issued a disciplinary warning to the chief executive and a six-month suspension for the compliance officer.
The partial business suspension runs from March 27 through September 27. New customers will face temporary restrictions on external cryptocurrency transfers, though trading, buying, selling, and deposits and withdrawals remain available. Existing customers face no restrictions.
During on-site inspections in March and April last year, the FIU identified 6.65 million violations of the Act on Reporting and Using Specified Financial Transaction Information, known as the Special Financial Information Act. Violations included conducting transactions with unregistered virtual asset service providers, failing to verify customer identities, breaching transaction restriction requirements, and improper record retention.
Specifically, Bithumb facilitated 45,772 cryptocurrency transactions with 18 unregistered overseas virtual asset operators. The exchange marked identity verification as complete in 3.55 million cases where customer identification was impossible or address fields were left blank. Transaction restriction violations totaled approximately 3.04 million cases. Additionally, Bithumb failed to retain copies of identity verification documents from customers in 16,000 instances.
The FIU determined the fine amount based on the severity and nature of violations, motives and consequences, and whether Bithumb had previously violated the law.
The FSC will allow a 10-day period for Bithumb to submit its response before finalizing the penalty amount.
"Despite the FIU notifying them of compliance requirements, including requesting transaction suspensions, they failed to fulfill their obligations, showing significantly insufficient commitment to legal compliance," an FSC official said. "The FIU will proceed sequentially with follow-up measures from remaining on-site inspections and will continue to impose strict sanctions against money laundering risks."
