South Korea’s Bithumb Receives 6-Month Suspension Notice Over Regulatory Breach

Bithumb, a prominent cryptocurrency exchange in South Korea, has been warned that it could face severe penalties for violating anti-money laundering regulations. The Financial Intelligence Unit, which is part of the Financial Services Commission, has notified the exchange that it may undergo a partial business shutdown lasting six months.

Sources reveal that the situation involves issues of violations related to the exchange’s operations. A final decision on potential penalties will be made after a sanctions review committee hearing scheduled for later this month, and the proposed penalties may be adjusted based on the outcome of that hearing.

Violations and Proposed Penalties

South Korea’s Financial Intelligence Unit has identified several violations of the Specific Financial Information Act at Bithumb. The exchange engaged in transactions with unregistered foreign virtual asset operators and failed to comply with key know-your-customer (KYC) regulations, increasing the risk of illegal activity.

Authorities view these issues as significant threats to the integrity of the virtual asset market. The proposed penalties aim to address these compliance problems directly. Bithumb will face a partial suspension of operations for six months. During this period, new members will not be allowed to transfer virtual assets to external wallets.

Meanwhile, current account holders can still access their Korean won deposits and withdrawals, and they can freely move their virtual assets while continuing to trade normally. Additional actions include issuing a warning to CEO Lee Jung-hoon and considering the dismissal of the compliance reporting director. 

Broader Regulatory Crackdown

South Korea is known to enforce strict regulations on exchanges and crypto-related services. The Financial Intelligence Unit (FIU) consistently holds major exchanges accountable for their anti-money laundering practices. For example, in 2024, Upbit, South Korea’s leading crypto exchange, was fined $71,500 per case for issues involving approximately 500,000 to 600,000 suspected customer verification violations. 

Earlier in 2026, Korbit received a penalty of approximately $1.86 million and was issued a warning for similar violations. The Bithumb case has drawn scrutiny following a mistaken bitcoin transfer, which prompted further investigations into the company’s internal controls and potential price manipulation across platforms. These actions aim to enhance consumer protections and mitigate risks in the sector.

Meanwhile, lawmakers have highlighted regulatory gaps exposed by these incidents. Industry stakeholders anticipate stricter compliance requirements as South Korea continues to update its digital asset regulations in 2026. The primary objective behind these enhanced measures is to protect users.

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