TLDR
- Bithumb received a record penalty of 36.8 billion won (approximately $24.5 million) from South Korean authorities for anti-money laundering failures.
- Investigators discovered approximately 6.65 million compliance violations during a comprehensive audit of the exchange.
- The platform facilitated 45,772 cryptocurrency transactions with 18 unauthorized international virtual asset service providers.
- New users face a temporary ban on external cryptocurrency transfers between March 27 and September 26.
- Current account holders maintain full access to trading features and external transfer capabilities.
- A separate investigation by the Financial Supervisory Service examines a February incident involving an erroneous 620,000 Bitcoin distribution.
South Korean financial authorities have levied a substantial 36.8 billion won penalty against Bithumb for AML violations. Converting to current market rates, this fine amounts to roughly $24.5 million. The sanctions package includes operational limitations for newly registered customers following an extensive regulatory examination.
The Financial Intelligence Unit, which functions within the Financial Services Commission’s oversight structure, spearheaded the comprehensive audit. This unit maintains responsibility for monitoring anti-money laundering compliance across financial institutions. During their investigation, examiners uncovered substantial systemic failures in compliance protocols.
Bithumb Fined After AML Inspection Uncovers Millions of Breaches
Investigators documented approximately 6.65 million separate violations throughout their anti-money laundering examination. According to inspectors, the cryptocurrency platform neglected fundamental customer identification verification procedures. The audit revealed additional shortcomings in transaction surveillance systems and documentation practices.
Authorities stated the exchange processed 45,772 cryptocurrency transactions through 18 foreign virtual asset service providers lacking proper registration. These transactions violated South Korea’s established anti-money laundering protocols. A specialized sanctions committee analyzed the investigation results before finalizing the punitive measures.
The committee’s determination relied on provisions within the Act on Reporting and Use of Specific Financial Transaction Information. Regulators evaluated whether Bithumb fulfilled its mandatory reporting obligations and compliance responsibilities. Following deliberations, the committee authorized the 36.8 billion won sanction.
The Financial Intelligence Unit had issued prior warnings to the platform regarding its relationships with unregistered international entities. Authorities directed Bithumb to terminate operations connected to these organizations. Nevertheless, regulators determined the exchange neglected to execute necessary preventive actions.
According to an FIU representative, the platform disregarded regulatory directives despite multiple advisories. The spokesperson explained, “The platform persisted in processing transactions with unregistered providers following receipt of corrective mandates.” Authorities subsequently enacted penalties pursuant to established anti-money laundering regulations.
Regulators additionally imposed a six-month prohibition on external cryptocurrency transfers for newly registered accounts. This restriction operates from March 27 through September 26. Throughout this timeframe, new registrants cannot execute outgoing or incoming cryptocurrency transfers.
Meanwhile, established account holders retain unrestricted trading access and external transfer functionality. New registrants maintain the ability to purchase and sell digital currencies on the platform. Korean won deposits and withdrawals remain available without limitations.
Authorities characterized this penalty as unprecedented in magnitude for a domestic cryptocurrency trading platform. Multiple exchanges have faced sanctions in recent years for anti-money laundering infractions. This current penalty surpasses all previous cases in financial scope.
Previously, Upbit encountered a three-month limitation on cryptocurrency deposits and withdrawals for new registrants. That exchange received a 35.2 billion won fine. Authorities attributed those sanctions to transactions with unregistered virtual asset service providers.
Bithumb Faces a Separate Probe Over a Bitcoin Crediting Error
The exchange simultaneously confronts examination by the Financial Supervisory Service regarding an internal operational failure. On February 6, a system malfunction resulted in users receiving credits for 620,000 Bitcoin during a promotional campaign. The mistaken distribution represented a value ranging from $40 billion to $44 billion based on prevailing market prices.
Reports indicate a staff member incorrectly inputted distribution amounts in Bitcoin rather than Korean won. Consequently, the platform’s systems generated and allocated substantial phantom cryptocurrency balances within a brief timeframe. Authorities initiated an assessment of the exchange’s internal oversight mechanisms.
FSS Governor Lee Chan Jin discussed the matter during a regulatory briefing. He indicated authorities would investigate how the platform documented such substantial balances despite insufficient reserve holdings. Lee emphasized regulators would scrutinize internal control frameworks and electronic record-keeping systems.
The Financial Supervisory Service maintains its ongoing investigation into the February malfunction. No penalties related to this incident have been announced. The inquiry continues as regulators examine internal documentation and operational procedures.
