Local news sources say that crypto exchange Bithumb could have to stop doing operations for a while since it didn’t do enough to prevent money laundering and check customers’ identities.
According to reports, regulators are cracking down on anti-money laundering rules, which may force Bithumb, the second-largest cryptocurrency exchange in South Korea by trading volume, to stop doing business for up to six months.
Exchange says sanction is not yet final
According to local news reports on Monday, South Korea’s Financial Intelligence Unit (FIU) sent Bithumb a preliminary notice of a six-month partial suspension for allegedly failing to follow the rules of the Act on Reporting and Using Specified Financial Transaction Information against money laundering and know-your-customer.
The regulator reportedly expressed concerns about Bithumb’s business dealings with unregistered offshore virtual asset service providers and its inadequate client due diligence.
The FIU also gave Bithumb’s CEO a warning, which is a serious punishment that could make it difficult for him to get hired again or take on new jobs in the future. Regulators are likely to convene a review of the sanctions later in March before making any final decisions. Bithumb told News1 that the process is still in the pre-notification stage and that the scope of any fines could yet vary.
Scrutiny follows major promotional error
If the ban is put into effect, new users won’t be able to move digital assets off the platform.
The notice comes after South Korea’s Financial Services Commission came under fire for not finding serious problems with Bithumb’s internal systems after the exchange accidentally gave away 2,000 Bitcoin (BTC $68,898 per user instead of 2,000 Korean won ($1.40) during a promotional event on February 6, giving away a total of 620,000 BTC (worth about $43 billion at the time).
South Korea tightens AML enforcement
Regulators in South Korea want to make it harder for crypto exchanges that are thought to be breaking AML and KYC rules to operate.
The FIU gave Dunamu, the parent business of cryptocurrency exchange Upbit, a partial three-month suspension and a 35.2 billion won ($25 million) punishment in November 2025 for identical offences.
In December 2025, the crypto exchange Korbit also got a warning and a punishment of 2.73 billion won ($1.9 million).
Both administrative penalties were given because of worries about working with foreign crypto service providers and not following proper customer verification procedures.