South Korea’s second-largest cryptocurrency exchange, Bithumb, is on the verge of facing a significant regulatory crackdown. The country’s Financial Intelligence Unit (FIU) has issued a preliminary notice of a six-month partial suspension due to alleged anti-money laundering (AML) and know-your-customer (KYC) failures, according to local media reports.
Regulatory Scrutiny Intensifies
The FIU’s notice is based on Bithumb’s dealings with unregistered overseas virtual asset service providers and shortcomings in customer due diligence. This move follows a series of regulatory actions aimed at tightening AML and KYC controls in the South Korean crypto industry. The FIU also issued a reprimand warning to Bithumb’s CEO, a penalty that could restrict his reappointment or future roles in the industry.
Bithumb’s Response
A Bithumb spokesperson told News1 that the preliminary notice is not a final decision and that the scope of any sanctions could still change. “This measure is not yet a confirmed sanction, but is a pre-notification stage, and there may be some adjustments in the sanctions trial,” the spokesperson said. “Restrictions only apply to the transfer (withdrawal) of virtual assets by new members.”
Context and Background
The regulatory action against Bithumb comes in the wake of the exchange’s recent missteps. In February, Bithumb mistakenly credited 2,000 Bitcoin (BTC) per user instead of 2,000 Korean won ($1.40) during a promotional event, distributing a total of 620,000 BTC (worth around $43 billion at the time). This error highlighted significant flaws in the exchange’s internal systems, raising further concerns among regulators.
Broader Regulatory Trends
South Korean regulators are increasingly cracking down on cryptocurrency exchanges suspected of AML and KYC violations. In November 2025, the FIU imposed a partial three-month suspension and a 35.2 billion won ($25 million) fine on cryptocurrency exchange Upbit’s parent company, Dunamu, for similar infractions. Crypto exchange Korbit also received a warning and a 2.73 billion won ($1.9 million) fine in December 2025.
Looking Forward
The potential suspension of Bithumb underscores the growing regulatory pressure on cryptocurrency exchanges in South Korea. As the country continues to tighten its grip on the crypto sector, exchanges will need to enhance their compliance measures to avoid severe penalties. The upcoming sanctions review in March will be crucial in determining the final outcome for Bithumb and the broader implications for the South Korean crypto market.
About the Author
