South Korea’s cryptocurrency sector is once again under regulatory scrutiny as Bithumb, the country’s second-largest crypto exchange by trading volume, faces the possibility of a partial business suspension. The proposed action comes after regulators flagged alleged shortcomings in the platform’s anti-money laundering and customer verification practices.

The Financial Intelligence Unit (FIU), operating under South Korea’s Financial Services Commission, has issued a preliminary notice suggesting a six-month partial suspension. The warning highlights concerns about Bithumb’s compliance with financial regulations governing digital asset platforms.

FIU Issues Preliminary Sanction Notice

According to local media reports, the FIU informed Bithumb that it may impose a partial suspension of up to six months under the Act on Reporting and Using Specified Financial Transaction Information. The regulator reportedly identified issues related to anti-money laundering compliance and know-your-customer procedures.

Authorities have raised concerns about Bithumb’s dealings with overseas virtual asset service providers that are not registered with South Korean regulators. In addition, regulators pointed to gaps in the exchange’s customer due diligence processes.

The proposed suspension would not shut down the platform entirely but could limit certain operations. If confirmed, new users may face restrictions when attempting to transfer digital assets off the exchange.

CEO Receives Reprimand Warning

Alongside the proposed suspension, the FIU also issued a reprimand warning to Bithumb’s chief executive officer. In South Korea’s financial regulatory framework, such a warning is considered a serious disciplinary action.

A reprimand warning can affect a senior executive’s ability to continue in leadership roles. It may restrict the CEO’s chances of reappointment and could limit future positions within financial institutions.

Regulators are expected to review the case in a sanctions meeting scheduled for later in March before making a final decision.

Exchange Says Decision Not Final

Bithumb has responded by emphasizing that the measure is still at the pre-notification stage. According to the company, the sanctions are not yet finalized and may change after the regulatory review process.

A spokesperson for the exchange told local outlet News1 that the restrictions under consideration would only apply to withdrawals of virtual assets by newly registered users.

The company also noted that discussions with regulators are ongoing and that the scope of the potential penalties could still be adjusted during the sanctions review.

Earlier Incident Drew Attention to Internal Systems

The FIU’s notice follows increased scrutiny of Bithumb’s internal systems after a high-profile operational mistake earlier this year.

On Feb. 6, the exchange mistakenly credited users with 2,000 Bitcoin during a promotional event. The intended reward was 2,000 Korean won, worth about $1.40.

As a result of the error, a total of 620,000 Bitcoin was briefly distributed across accounts. At the time, the amount had an estimated value of about $43 billion.

The incident triggered criticism of both the exchange and regulators. Some observers questioned why internal controls failed to detect the mistake quickly.

Crypto Exchanges Face Stricter Enforcement

The action against Bithumb comes as South Korean authorities tighten oversight of digital asset platforms. Regulators have recently taken enforcement steps against several exchanges over similar compliance issues.

In November 2025, the FIU imposed a three-month partial suspension and a 35.2 billion won fine on Dunamu, the parent company of crypto exchange Upbit, citing violations related to anti-money laundering obligations.

A month later, crypto exchange Korbit also faced regulatory action. Authorities issued a warning and imposed a 2.73 billion won fine over concerns linked to overseas crypto service providers and insufficient customer verification measures.

These cases signal a broader push by South Korean regulators to strengthen monitoring of the crypto industry and ensure exchanges follow financial crime prevention rules.