Bithumb, South Korea’s second-largest cryptocurrency exchange, faces a six-month partial suspension and a significant fine due to serious compliance deficiencies, according to a Financial Intelligence Unit report. Bithumb was put under investigation on the grounds that there were deficiencies in the platform’s structural anti-money laundering (AML) processes and delays in reporting suspicious transactions.
Nonconformities and Regulator’s Findings
The Financial Intelligence Unit’s review found deficiencies in Bithumb’s financial transaction reporting in three key areas. In particular, the weakness of anti-money laundering policies and inadequacies in customer identity verification steps were reflected in the report. In addition, it was stated that the exchange continues transactions with foreign crypto platforms that are not registered and this poses a direct risk. It was also noted that there were delays and deficiencies in suspicious transaction reports. It was reported that these identified deficiencies pointed to multiple deficiencies in the overall compliance structure, beyond individual operational errors.
Partial Suspension and Penalty Sanction on Management
The proposed six-month partial suspension does not impose any restrictions on existing users’ services, such as cryptocurrency trading, Korean won deposits and withdrawals. The sanction targets only newly registered users and limits their ability to transfer assets to external wallets. Thus, Bithumb’s capacity to attract new investors to the platform and keep the risk of capital outflow under control will decrease.
The Financial Intelligence Unit also recommended a formal warning mechanism for Bithumb’s CEO within the framework of industry regulations. Such a warning could create a legal impediment to future reappointment to financial sector leadership. In this respect, it seems that the punishment targets not only the institution but also the management.
Massive Distribution Error in February
A major technical error in February 2026 was effective in accelerating the process. Bithumb accidentally distributed billions of dollars of Bitcoin to its users as a result of a system malfunction. This incident led the government to increase its control over the stock market. The Financial Intelligence Unit’s investigation may have begun before this incident or accelerated after the system failure; The available information is not clear on this issue. However, Bithumb suffered a major technical error and subsequently received a suspension notice, posing a serious reputational threat to the institution.
Possible Fines and Sectoral Repercussions
Although the amount of the fine to be determined is not clear, the figures spoken in the crypto industry are 25 million dollars and above. This figure rivals the record fine recently set for Upbit, the country’s largest exchange. Thus, the fact that large platforms in South Korea faced sanctions of a similar scale one after the other shows that the regulator follows a consistent line in its supervision and sanction practices against the sector.
Next Steps of the Process
Within the scope of the process, a sanctions committee meeting will be held in March, where the details of the penalty to be imposed and the scope of the suspension will be clarified. Bithumb stated that the current situation is in the preliminary notification process and announced that it aims to reveal improvement efforts in the review.
Preliminary notifications submitted by regulators in South Korea may not always come into force; However, it creates constant pressure on the responsibility area of the stock exchanges.
