South Korean cryptocurrency exchange Bithumb has received a preliminary notice of sanctions that could lead to a partial suspension of business for six months, local media reports.
The notice came from the Financial Intelligence Unit (FIU) of the Financial Services Commission, which monitors compliance with anti-money laundering measures for crypto companies under the Law on Reporting and Use of Specific Information on Financial Transactions.
Regulators said Bithumb continued to transact with overseas virtual asset companies that were not registered in South Korea and failed to properly enforce certain Know Your Customer procedures. The FIU proposed a six-month partial suspension and disciplinary measures against the exchange’s CEO.
The restriction would apply only to virtual asset transfers made by newly registered users. According to the report, existing customers will still be able to deposit and withdraw Korean won and cryptocurrencies and trade on the platform.
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 tighten oversight of digital asset platforms. Last year, the FIU imposed a three-month partial suspension and a 35.2 billion won ($23.65 million) fine on Dunamu, Upbit’s operator, for similar violations. Korbit received a similar fine of 2.73 billion won and also an institutional warning.
Founded in 2014, Bithumb is one of the largest exchanges in South Korea and ranks second in domestic trading volume behind Upbit, according to data from CoinGecko. Along with Coinone and Korbit, these platforms account for the vast majority of crypto trading activity from registered exchanges in the country.
The sanctions come after Bithumb mistakenly distributed billions of dollars in 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.
