Bithumb Faces Six Month Suspension Over AML Violations

South Korea’s major cryptocurrency exchange Bithumb is facing a proposed six month partial suspension after regulators flagged anti money laundering and customer verification failures.

Key Takeaways

• South Korea’s Financial Intelligence Unit has issued a preliminary notice proposing a six month partial suspension against Bithumb.
• The restriction would limit virtual asset transfers for newly registered users if the sanction is finalized.
• Regulators cited anti money laundering violations, including dealings with unregistered overseas crypto operators and weak customer verification procedures.
• Bithumb’s CEO also received a disciplinary warning that may affect future leadership eligibility.

What Happened?

South Korea’s Financial Intelligence Unit has issued a preliminary notice to Bithumb proposing a six month partial suspension after identifying alleged violations related to anti-money laundering and Know Your Customer rules.

The proposed restriction would mainly block newly registered users from transferring virtual assets, while existing users would still be able to trade and move funds on the platform.

South Korean Regulators Target AML Compliance

According to local media reports, the Financial Intelligence Unit, which operates under the Financial Services Commission, found that Bithumb conducted transactions with overseas virtual asset service providers that were not registered in South Korea. Regulators also cited weaknesses in the exchange’s customer due diligence and verification procedures.

These activities are considered violations under the Act on Reporting and Using Specified Financial Transaction Information, which governs anti-money laundering compliance for crypto platforms operating in the country.

Authorities have proposed a six month partial business suspension as a penalty. If the measure is finalized, the restriction would apply only to virtual asset transfers made by newly registered users. Existing customers would still be able to deposit and withdraw Korean won and cryptocurrencies and continue trading normally on the exchange.

A Bithumb spokesperson acknowledged that the action remains at an early stage. The spokesperson said:

“

This measure is not yet a confirmed sanction, but is a pre notification stage, and there may be some adjustments in the sanctions trial.

Bithumb Spokesperson

Regulators are expected to hold a sanctions deliberation committee later this month to determine the final level of penalties.

CEO Faces Disciplinary Action

Along with the proposed suspension, regulators issued a reprimand warning to Bithumb’s chief executive. In South Korea’s financial regulatory system, such warnings are considered serious disciplinary measures and may limit the executive’s ability to be reappointed or take leadership roles in financial companies in the future.

The development highlights the growing pressure on crypto exchanges to maintain strong internal compliance systems and monitoring mechanisms.

Incident Triggers Closer Regulatory Scrutiny

The regulatory action follows a recent incident that raised concerns about Bithumb’s internal systems. In February, the exchange mistakenly credited users with 2,000 Bitcoin instead of 2,000 Korean won during a promotional event.

The error reportedly resulted in the accidental distribution of 620,000 Bitcoin, worth tens of billions of dollars at the time. The incident prompted South Korea’s financial watchdog to launch a full scale investigation into Bithumb’s internal controls and risk management processes.

Regulators believe the case exposed weaknesses in the exchange’s operational safeguards.

South Korea Tightens Oversight of Crypto Platforms

The move against Bithumb reflects a broader effort by South Korean authorities to strengthen oversight of cryptocurrency exchanges.

In recent years, regulators have imposed similar penalties on other major platforms operating in the country.

• In November 2025, the Financial Intelligence Unit imposed a three month partial suspension and a 35.2 billion won fine on Dunamu, the operator of Upbit.
• In December 2025, crypto exchange Korbit received a warning and a 2.73 billion won fine over similar compliance issues.

Both cases involved concerns about transactions with overseas crypto service providers and failures in customer verification practices.

Founded in 2014, Bithumb remains one of South Korea’s largest cryptocurrency exchanges and ranks second in trading volume behind Upbit, according to industry data. Together with Coinone and Korbit, these exchanges account for the majority of the country’s regulated crypto trading activity.

CoinLaw’s Takeaway

In my experience covering crypto regulation, South Korea has one of the toughest compliance environments for exchanges, and this case shows regulators are willing to enforce those rules strictly. I found that even large platforms like Bithumb are not immune when regulators detect gaps in anti-money laundering controls.

If the suspension is finalized, it may not completely shut down Bithumb’s operations, but it sends a strong signal to the entire industry that compliance failures can lead to serious operational restrictions. Exchanges operating in strict regulatory markets must prioritize internal controls and customer verification to avoid similar penalties.

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