Bithumb, recognized as South Korea’s second-largest cryptocurrency exchange by trading volume, is under scrutiny for potentially facing a six-month partial cessation of its operations due to alleged negligence in anti-money laundering (AML) and customer verification practices.
According to local media, South Korea’s Financial Intelligence Unit (FIU) issued a preliminary notice regarding the suspension based on evaluations of Bithumb’s compliance under the Act on Reporting and Using Specified Financial Transaction Information. The FIU has raised concerns regarding Bithumb’s interactions with unregistered overseas virtual asset service providers and deficiencies in its customer due diligence protocols.
Furthermore, Bithumb’s CEO has reportedly received a serious warning, regarded as a substantial penalty, which may affect his ability to seek future positions within the company. A sanctions review is expected later in March before any decisions are finalized. Bithumb has stated that the situation remains in the pre-notification phase and that potential sanctions may still be modified.
In the event that the suspension is confirmed, new accounts could be restricted from transferring digital assets away from the platform, as noted in the reports. Bithumb has not yet responded to requests for comments from Cointelegraph.
The notification comes after increased oversight by South Korea’s Financial Services Commission, following an incident in which Bithumb mistakenly credited user accounts with 2,000 Bitcoin instead of the intended amount of 2,000 Korean won during a promotional event on February 6.
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“This measure is not confirmed yet as a sanction but is part of the pre-notification stage, and there may be adjustments in the sanctions process,” a spokesperson for Bithumb mentioned, adding that “the restrictions apply solely to the withdrawal of virtual assets by new members.”
As South Korean authorities intensify their regulatory approach, similar sanctions have been issued, such as a three-month suspension and a fine against Upbit’s parent company for AML and KYC violations.
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The ongoing developments in cryptocurrency regulation highlight the shifting landscape within which exchanges operate, necessitating strict adherence to compliance standards.
