South Korea’s FIU Proposes Six-Month Partial Suspension for Bithumb Over AML Failures
Bithumb, founded in 2014 and currently South Korea’s second-largest crypto exchange by trading volume, received a preliminary sanctions notice on Monday from the Financial Intelligence Unit, or FIU, the body responsible for enforcing anti-money laundering compliance for crypto firms under South Korea’s Act on Reporting and Using Specified Financial Transaction Information.
The notice proposes a six-month partial business suspension and a reprimand for the company’s CEO, a designation that, under South Korean financial regulations, can trigger restrictions on reappointment and future senior roles across the industry.
The FIU cited two specific failures: Bithumb’s dealings with overseas virtual asset service providers that were not registered in South Korea, and insufficient Know-Your-Customer (KYC) verification practices for its own users. Bithumb told local outlet News1 that the measure “is not a final sanction, but rather a preliminary notice, and there may be some adjustments during the sanctions review.”
The suspension, if confirmed, would be narrower in scope than the headline suggests. According to industry reports, restrictions would block virtual asset transfers for newly registered users only. Existing customers would retain full access to deposit and withdraw Korean won and crypto assets and continue trading on the platform.
That structure mirrors the approach regulators used against Dunamu, the operator of market leader Upbit, which received a three-month partial suspension in November 2025 alongside a 35.2 billion won (approximately $25 million) fine for comparable KYC and overseas operator reporting failures. Korbit received a 2.73 billion won fine and an institutional warning in December 2025 for related infractions.
A Pattern, Not a One-Off
The Bithumb action is part of a broader and systematic FIU enforcement cycle that has been running since 2025. The FIU has signaled that sanctions deliberations for Coinone and GOPAX will proceed sequentially as part of the same compliance review series, meaning Bithumb is not the last exchange in South Korea likely to receive this kind of notice.
The inspections reviewed each platform under the same legal framework, with one industry official telling local media that the severity of penalties is “unlikely to differ meaningfully” from those already imposed.
South Korea requires crypto exchanges to apply AML and KYC standards equivalent to those of banks, and the FIU has demonstrated since the November Upbit action that it is willing to impose partial operational restrictions rather than simply issue fines when oversight gaps are serious enough.
The 620,000 BTC Error in the Background
The AML notice arrives roughly a month after a separate and highly embarrassing incident at Bithumb. In February, the exchange mistakenly distributed 620,000 BTC to approximately 695 users due to a system error, a figure that, at current prices, would be worth tens of billions of dollars. Bithumb froze transactions immediately, recovered 99.7% of the misplaced funds, and launched a compensation program.
South Korea’s Financial Supervisory Service opened a full-scale investigation into the incident. The two cases are legally distinct, but their proximity has focused regulatory and public attention on Bithumb’s operational controls and governance in ways that complicate any argument the exchange might make about the proportionality of the FIU’s proposed sanction. The March 16 committee meeting will determine whether the six-month proposal holds, is reduced, or is supplemented with a financial penalty.
