Seoul-headquartered Bithumb exchange has met with a severe punishment on its home turf on charges of being in breach of the national anti-money laundering regulations. As reported by Yonhap News on Monday, Bithumb now faces a $24 million fine along with orders of a six-month partial service suspension.
The decision was reportedly finalized by South Korea’s Financial Intelligence Unit (FIU). As reported by Yonhap, the penalty was decided following a sanctions deliberation committee meeting.
The partial business suspension period of six months marks the longest timeframe for a sanction that Seoul has levied on a home-grown exchange so far.
Under the directive, the exchange will be halting deposit and fiat withdrawal services for new customers starting March 26 till September 27. Existing Bithumb customers, meanwhile, will be able to continue using the buying and selling services along with exchanging, depositing, and withdrawing Korean Won.
“We have continuously requested Bithumb to stop trading with undeclared overseas virtual asset service providers, but it failed to fulfill its legal compliance obligations and showed a significantly insufficient willingness to comply with the law,” the media agency quoted the FIU as justifying its punishment.
The FIU of South Korea had started probing Bithumb between March and April last year. The agency reportedly claims that the exchange facilitated 45,772 undeclared crypto transfers to 18 foreign exchanges.
Compliance audits furthermore showed 3.55 million instances of failure to verify customer identities alongside 3.04 million cases where transactions were permitted despite incomplete identification measures.
Bitthumb’s CEO Lee Jae-won has been issued formal warnings on bringing the exchange’s operations in alignment with South Korea’s compliance guidelines, indicating KYC failures as well.
The setback for Bithumb and South Korea’s crypto ecosystem comes at a time when the country is working to regulate the digital assets space.
In recent developments, the country has started planning an AI system to monitor crypto transactions originating within the country. The authorities there have also mandated disclosure rules for crypto influencers.
As of now, the exchange has not reacted to the development on public platforms.