Synopsis: This article explains the action taken by South Korean regulators to prevent financial irregularities on Bithumb. This has happened even in other crypto platforms.
South Korea took strict action against Bithumb, one of its largest cryptocurrency exchanges. The government fined the company about 36.8 billion ($24.5 million) and also imposed a six-month partial business suspension.
This action was taken after authorities discovered that Bithumb had violated several Anti-Money Laundering (AML) rules, which are designed to prevent illicit financial activities such as money laundering and fraud.
Problems Found
During this inspection, the regulators discovered approximately 6.65 million violations of the rules.
Some of the issues included were the following:
- Failure to properly verify customer identities
- No restricting suspicious or risky transactions
- Poor record-keeping practices
Authorities also found that Bithumb allowed 45,772 crypto transactions involving 18 unregistered overseas crypto service providers. These companies were not approved under South Korean law, making such transactions illegal.
Who Took Action?
The penalties were decided by the Financial Intelligence Unit (FIU), which works under the Financial Services Commission.
They reviewed Bithumb’s compliance with a law called the Act on Reporting and Use of Specific Financial Transaction Information, which sets rules for financial transparency and AML practices.
This fine is the largest ever given to a crypto exchange in South Korea, showing how serious the government is about enforcing regulations.
What Restrictions were Imposed?
The government did not completely shut down Bithumb but applied partial restrictions:
New customers:
- Cannot make external crypto transfers for six months
- Ban period: March 27 to September 26
Existing customers:
- Can continue trading normally
- No restrictions on their accounts
New customers (limited access):
- Can still buy/sell crypto
- Can deposit or withdraw Korean won
Why was Bithumb penalised?
According to the FIU, Bithumb had been warned multiple times to stop dealing with unregistered foreign crypto companies.
However, the exchange did not follow these warnings. It failed to set up proper systems to block such transactions. Because of this repeated non-compliance, regulators decided to impose strict penalties.
Also Read: JPMorgan’s role in $328M Crypto Ponzi Scheme
Earlier Warning before Final Decision
Before the final punishment, the FIU had already issued a preliminary notice on March 9, warning Bithumb about a possible six-month suspension. After reviewing the case further, they confirmed the final penalties.
Fines and Punishments on other crypto platforms
Bithumb is not the only exchange facing this action from its regulators. South Korea has been tightening its rules on crypto platforms.
A platform named Upbit was penalised in February 2025. Even a three-month restriction was placed on deposits and withdrawals for new users. It was fined for 35.2 billion, worth around $23.5 million.
Another platform, named Korbit, was penalised in December 2025. It was fined 2.73 billion, around $1.8 million. It also received a warning for AML and customer verification failures.
Conclusion
In short, South Korea is becoming more strict with crypto regulations. This is becoming stringent when it comes to preventing illegal financial transactions.
As a result, crypto exchanges must follow AML rules strictly, governments are monitoring closely, and non-compliance can lead to huge fines and restrictions. The action against Bithumb highlights South Korea’s strong push to clean up the crypto industry.
By enforcing strict AML rules, authorities aim to make the market safer and more transparent.
Written by Parvati Anilkumar
