TL;DR
- South Korea’s FIU sent Bithumb a preliminary notice proposing a six-month partial business suspension and fines in the tens of billions of won.
- The case extends beyond basic KYC concerns, with regulators pointing to weaknesses in ledger operations, internal accounting, governance and infrastructure.
- Compared with Upbit’s earlier penalty, the proposed action against Bithumb suggests tougher enforcement and broader expectations for exchange controls across South Korea’s crypto market going forward overall.
South Korea’s crypto market is staring at a regulatory shock, and the proposed sanctions against Bithumb suggest watchdogs are no longer treating exchange compliance failures as routine cleanup work. The Financial Intelligence Unit has issued Bithumb a preliminary notice proposing a six-month partial business suspension and administrative fines in the tens of billions of won. The penalty could match or exceed the 35.2 billion won previously imposed on Upbit. The notice is not yet a final order, but it signals that one of the country’s largest exchanges is facing an enforcement test.
The proposed measures reach beyond basic KYC failures
What makes the case more significant is the breadth of concerns gathering around Bithumb’s control environment. The proposed sanctions are being linked not only to anti-money laundering and know-your-customer deficiencies, but also to exchange infrastructure and governance questions. Lee Chan-jin, governor of the Financial Supervisory Service, said recent incidents reflected weaknesses in ledger operations and internal accounting. That shifts the discussion away from onboarding mistakes and toward system-level reliability. In practice, regulators appear to be testing whether crypto exchanges can be judged by the same control standards expected of mature financial institutions.
The immediate concern for users is how a partial suspension could change day-to-day access before any final order is defined. Regulators have not yet specified which product lines would be restricted or when the measures would begin, leaving room for uncertainty. Reporting tied to the proposal suggests that onboarding and transfer functions could face constraints if the sanction is finalized. Users may also encounter extra verification steps or service adjustments aligned with the regulator’s remediation priorities. Until the FIU completes its sanctioning process, Bithumb remains in limbo where ordinary service may continue, but under a cloud.
The comparison with Upbit makes the warning starker because Bithumb’s proposed punishment points to a tougher enforcement phase for South Korea’s digital-asset sector. Upbit was fined 35.2 billion won in November 2025 for breaches of the Specified Financial Information Act, including KYC failures, and received a three-month suspension affecting new-user crypto transfers. Bithumb now faces a proposed six-month partial suspension, double that duration, alongside potentially larger fines. The alleged violations include incomplete identity checks, delayed or missing suspicious transaction reports, dealings with unregistered platforms, and weaknesses in order-book and ledger controls.
