South Korean regulators threaten Bithumb with six-month operational restrictions
South Korea's second-largest cryptocurrency platform Bithumb could face partial operational restrictions due to alleged failures in anti-money laundering protocols and customer identification processes, local sources indicate.
As South Korean financial authorities intensify their crackdown on anti-money laundering compliance, Bithumb—the nation's second-biggest digital asset exchange measured by transaction volume—may encounter a partial operational suspension lasting as long as six months, according to reports.
Local media outlets reported on Monday that South Korea's Financial Intelligence Unit (FIU) has delivered a preliminary notification to Bithumb regarding a potential six-month partial suspension stemming from purported violations of anti-money laundering regulations and know-your-customer requirements under the Act on Reporting and Using Specified Financial Transaction Information. The regulatory body allegedly highlighted issues surrounding transactions with unregistered international virtual asset service providers and inadequacies in performing proper customer due diligence procedures.
Additionally, the FIU reportedly issued a formal reprimand to Bithumb's chief executive officer, a type of warning regarded as a severe disciplinary action that could result in limitations on his reappointment or eligibility for future executive positions. Financial authorities are anticipated to conduct a sanctions review proceeding later this month before determining any conclusive enforcement actions. According to statements Bithumb provided to News1, the regulatory measure currently remains at the preliminary notification phase, and the extent of any eventual sanctions may still undergo modifications.
This measure is not yet a confirmed sanction, but is a pre-notification stage, and there may be some adjustments in the sanctions trial. Restrictions only apply to the transfer (withdrawal) of virtual assets by new members.
Bithumb spokesperson
Should the suspension be made official, it would impose limitations preventing newly registered users from withdrawing or transferring digital assets from the exchange platform, the report indicated. At the time of publication, Bithumb had not provided a response to Cointelegraph's inquiry for additional comments.
This regulatory notification arrives amid heightened scrutiny directed at South Korea's Financial Services Commission regarding its inability to identify critical vulnerabilities associated with Bithumb's internal operational systems following an incident where the exchange erroneously allocated 2,000 Bitcoin (BTC) to each user rather than the intended 2,000 Korean won ($1.40) as part of a marketing promotion on Feb. 6, resulting in a total distribution of 620,000 BTC (valued at approximately $43 billion at the time).
South Korean regulators impose stricter money laundering regulations
Financial regulatory authorities in South Korea are pursuing more stringent enforcement measures and penalties against cryptocurrency trading platforms believed to have committed AML and KYC infractions.
During November 2025, the FIU levied a partial three-month operational suspension along with a penalty of 35.2 billion won ($25 million) against Dunamu, the parent corporation of cryptocurrency exchange Upbit, for comparable regulatory violations.
In a separate action, cryptocurrency platform Korbit was issued a warning accompanied by a fine of 2.73 billion won ($1.9 million) in December 2025.
These administrative enforcement actions in both cases originated from regulatory concerns involving business relationships with international cryptocurrency service providers and failures to properly implement customer verification and identification practices.