Bithumb confronted with proposed 6-month partial suspension due to South Korea AML violations.

The suspension, as reported by local media, is expected to limit virtual asset transfers exclusively for newly registered users, leaving existing customer transactions unaffected.

(Photo by Daniel Bernard on Unsplash/Modified by CoinDesk)

What to know:

• Bithumb has reportedly received an initial notice from South Korea’s FIU regarding a suggested six-month partial suspension and a warning for its CEO.
• The notice references alleged infractions related to inadequate AML/KYC enforcement and dealings with unregistered foreign platforms.
• The suspension would solely limit virtual asset transfers for newly registered users, leaving existing customer operations unaffected.

South Korean cryptocurrency exchange Bithumb has been issued a preliminary notice of sanctions that may lead to a six-month partial business suspension, according to local media.

The notice was issued by the Financial Services Commission’s Financial Intelligence Unit (FIU), which is responsible for overseeing anti-money laundering compliance for cryptocurrency companies under the Act on Reporting and Using Specified Financial Transaction Information.

Regulators indicated that Bithumb has continued transactions with international virtual asset businesses that are not registered in South Korea and did not adequately implement certain Know Your Customer protocols. The FIU has suggested a six-month partial suspension and disciplinary measures against the exchange’s CEO.

The limitation will apply exclusively to virtual asset transfers made by newly registered users. Existing clients will still be able to deposit and withdraw Korean won and cryptocurrencies, as well as trade on the platform, as reported.

The ruling is not definitive and could be altered during the review process. The FIU plans to convene a sanctions deliberation committee later this month to finalize the penalty.

This case arises as South Korean regulators enhance scrutiny over digital asset platforms. Last year, the FIU imposed a three-month partial suspension and a fine of 35.2 billion won ($23.65 million) on Dunamu, the operator of Upbit, for similar compliance issues. Korbit also received a 2.73 billion won fine and an institutional warning.

Bithumb, established in 2014, is one of the largest exchanges in South Korea and ranks second in domestic trading volume behind Upbit, based on CoinGecko data. Together with Coinone and Korbit, these platforms comprise the majority of crypto trading activity among exchanges registered in the nation.

The sanctions follow an incident last month in which Bithumb mistakenly distributed billions of dollars’ worth of bitcoin to users, prompting the financial regulator to intensify scrutiny of cryptocurrency markets.

CoinDesk has contacted Bithumb for a statement but has not received a response at the time of publication.