South Korean cryptocurrency exchange Bithumb has received a preliminary notice of sanctions that could lead to a six-month partial suspension of the company, local media reports.
The announcement came from the Financial Services Commission’s Financial Intelligence Unit (FIU), which oversees anti-money laundering compliance for crypto firms under the Reporting and Use of Specified Financial Transaction Information Act.
Regulators said Bithumb continued transactions with overseas virtual asset companies 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 managing director.
The restriction will only apply to virtual asset transfers from 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. FIU plans to hold a sanctions committee later this month to determine the final punishment.
The case comes as South Korean regulators are tightening supervision 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, the operator of Upbit, for similar compliance failures. Korbit received a corresponding fine of 2.73 billion won and also 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 on exchanges registered in the country.
The sanctions come after Bithumb wrongly distributed billions of dollars worth of bitcoins to users last month, prompting the country’s financial watchdog to step up oversight of cryptocurrency markets.
CoinDesk has reached out to Bithumb for comment, but has not heard back at the time of writing.
