South Korean cryptocurrency exchange Bithumb has received a preliminary notice of sanctions that could lead to a partial suspension of its activities for six months, local media report.
The advisory comes from the Financial Intelligence Unit (FIU) of the Financial Services Commission, which oversees crypto companies’ anti-money laundering compliance under the Reporting and Use of Specified Financial Transactions Information Act.
Regulators said Bithumb continued trading with foreign virtual asset companies that were not registered in South Korea and failed to properly implement certain Know Your Customer procedures. The FIU proposed a six-month partial suspension and disciplinary measures against the stock exchange’s general director.
The restriction would only apply to transfers of virtual assets by newly registered users. Existing customers will still be able to deposit and withdraw Korean won and cryptocurrencies and trade on the platform, according to the report.
The decision is not final and may change during a review process. The FIU plans to hold a sanctions deliberation committee later this month to determine the final sanction.
The case comes as South Korean regulators step up oversight of digital asset platforms. Last year, the FIU imposed a three-month partial suspension and a fine of 35.2 billion won ($23.65 million) on Dunamu, Upbit’s operator, for similar compliance failures. Korbit received a similar fine of 2.73 billion won as well as an institutional warning.
Founded in 2014, Bithumb is one of South Korea’s largest exchanges and ranks second in domestic trading volume behind Upbit, according to CoinGecko data. Along with Coinone and Korbit, these platforms account for the vast majority of crypto trading activity of registered exchanges in the country.
The sanctions come after Bithumb mistakenly distributed billions of dollars worth of bitcoin to users last month, prompting the country’s financial watchdog to step up oversight of cryptocurrency markets.
CoinDesk reached out to Bithumb for comment but did not receive a response at the time of writing.
