TLDR
- Bithumb fined ₩36.8B ($25M) by South Korea over failure in AML and KYC procedures.
- Bithumb’s suspension restricts new users from transferring assets to external platforms.
- The investigation found 6.6 million cases of incomplete identity verifications.
- Bithumb’s CEO also received a formal reprimand as part of the sanctions.
Bithumb, a prominent South Korean cryptocurrency exchange, has been hit with a ₩36.8 billion ($25 million) fine after violating anti-money laundering (AML) and know-your-customer (KYC) regulations. The decision, finalized by the South Korean Financial Intelligence Unit (FIU), also includes a six-month partial suspension of its operations.
The Violation and Investigation Details
The investigation into Bithumb’s compliance practices revealed significant issues related to identity verification and overseas transactions. South Korea’s FIU found that Bithumb failed to properly verify the identities of customers on over 6.6 million occasions.
Additionally, the exchange conducted transactions with 18 foreign virtual asset providers, none of which were registered with the South Korean authorities. These breaches were identified during routine monitoring of cryptocurrency platforms in the country.
As a result, Bithumb was fined ₩36.8 billion (around $25 million). The fine was levied due to the exchange’s inability to meet the necessary AML and KYC standards. According to the FIU, these failures were critical in maintaining the integrity of South Korea’s financial system and preventing illicit activities within the crypto industry.
Impact of the Six-Month Partial Suspension
Alongside the substantial financial penalty, South Korean regulators ordered Bithumb to suspend part of its operations for six months. The partial suspension primarily affects new users, prohibiting them from transferring virtual assets to external wallets or platforms.
Existing users are still able to access and use most of the exchange’s services. This suspension is expected to impact Bithumb’s operations, particularly its ability to onboard new customers and allow transactions outside its platform.
Bithumb’s response to the suspension was to acknowledge the need for corrective measures. The company stated it would work on improving its compliance systems and processes in response to the sanctions.
Actions Taken Against Bithumb’s CEO
In addition to the financial fine and operational restrictions, the FIU issued a formal reprimand to Bithumb’s chief executive. This action highlights the seriousness with which South Korean regulators are treating compliance breaches in the cryptocurrency space. While the reprimand does not include any direct financial penalties for the CEO, it reflects the accountability imposed on those in leadership positions within the company.
Bithumb has been given ten days to provide an official response to the sanctions. The company has indicated that it will take corrective actions to enhance its internal compliance measures in order to prevent future violations.
The sanctions on Bithumb are part of ongoing efforts by South Korean authorities to enforce stricter regulations on cryptocurrency exchanges operating within the country. These measures are designed to combat money laundering and ensure that digital asset platforms adhere to international standards for financial transactions.
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