South Korean regulators have issued a preliminary notice to the crypto exchange Bithumb, warning of a potential six-month partial business suspension and sanctions against its CEO. The action stems from alleged failures in Anti-Money Laundering and Know Your Customer obligations, particularly regarding dealings with unregistered overseas platforms. This follows a broader pattern of regulatory scrutiny in the country, and on-chain data indicates a significant drop in trading activity as the market awaits a final decision from a sanctions review committee.
South Korea’s Financial Intelligence Unit issued a preliminary notice to the crypto exchange Bithumb on 09 March. The notice warns of a possible six-month partial business suspension and potential sanctions against its CEO.
Regulators stated the exchange failed to meet Anti-Money Laundering obligations under the Special Financial Information Act. Their concerns focus on dealings with unregistered overseas platforms and insufficient Know Your Customer compliance.
A sanctions review committee will meet later this month to decide if the suspension becomes final. This action follows Bithumb’s recent “ghost coin” error, which erroneously credited users with about $40 billion worth of Bitcoin.
In its defense, a Bithumb official stated, “This measure is not a final sanction, but rather a preliminary notice, and there may be some adjustments during the sanctions review.” The official added the restriction only applies to new members’ virtual asset withdrawals.
This is not the first such enforcement action by authorities. The operator of Upbit was fined the equivalent of $26 million and given a three-month partial suspension in late 2025 for similar violations.
The proposed six-month suspension for Bithumb is twice as long as the penalty previously given to Upbit. However, such partial suspensions typically restrict only new users from transferring crypto off-platform while existing users trade normally.
On-chain data shows a sharp decline in Bitcoin exchange flows involving Bithumb, dropping to just 15.9 BTC recently. This suggests traders and institutions are holding back activity amid the regulatory uncertainty.
Market participants are awaiting the Sanctions Review Committee meeting on 16 March. The drop in exchange flows indicates growing caution as regulatory scrutiny intensifies across the industry.
