In a significant enforcement action underscoring South Korea’s stringent regulatory stance, the Financial Intelligence Unit (FIU) has imposed a historic penalty on one of the nation’s largest cryptocurrency exchanges. Bithumb, a major player in the local market, has been fined 36.8 billion won (approximately $24.5 million) and subjected to a six-month partial business suspension. This decision, reported by the Yonhap News Agency, follows a comprehensive inspection that revealed widespread and systemic failures in the exchange’s anti-money laundering (AML) compliance framework.
South Korea imposes a six-month partial ban on Bithumb
The core of the sanction is a temporary prohibition on processing external cryptocurrency transfers for new customers. This restriction will be in effect from March 27 through September 26, 2024. Crucially, the measure is designed to be partial; existing Bithumb users will retain full trading capabilities, and new customers can still engage in fiat-to-crypto trading (buying/selling with Korean won) as well as deposit and withdraw Korean won. The targeted restriction specifically aims to halt the flow of assets to unregulated external platforms.
The FIU’s investigation uncovered a staggering volume of non-compliance. Regulators identified approximately 6.65 million individual violations during their AML audit. Among the most serious findings was Bithumb’s facilitation of 45,772 crypto transfers involving 18 distinct overseas virtual asset service providers (VASPs) that are not registered in South Korea. This directly contravenes the nation’s Act on Reporting and Use of Specific Financial Transaction Information, which mandates that domestic exchanges only deal with registered foreign entities to maintain an auditable chain of custody and mitigate illicit finance risks.
A FIU statement indicated that the exchange had received repeated warnings to cease transactions with these unregistered overseas firms but failed to implement effective blocking mechanisms. A preliminary notice of the proposed six-month partial suspension was communicated to Bithumb on March 9, citing these persistent compliance gaps before the final penalty was ratified by the sanctions deliberation committee.
South Korea’s broader AML enforcement drive
The action against Bithumb is not an isolated incident but part of a sustained, high-profile crackdown by South Korean financial regulators to enforce AML rules within the cryptocurrency sector. The FIU, operating under the Financial Services Commission (FSC), has methodically targeted major exchanges for similar infractions.
Upbit’s earlier penalties
In February 2025, the market’s dominant exchange, Upbit, faced its own sanctions. The FIU imposed a three-month restriction on cryptocurrency deposits and withdrawals for new customers after finding violations related to transactions
