South Korea’s Financial Intelligence Unit (FIU) imposed a 5.2 billion won ($3.5 million) penalty on Coinone after identifying tens of thousands of compliance breaches. The action signals escalating enforcement pressure on domestic crypto exchanges.
Authorities found roughly 70,000 cases where Coinone failed to verify user identities, according to reporting from The Korea Times, Chosun, and Yonhap News. The exchange also processed more than 10,000 transactions linked to 16 unregistered foreign platforms despite prior warnings. Regulators said the platform marked incomplete user profiles as verified and allowed continued trading without proper due diligence.
Park Sang-soo
Why Is South Korea Tightening Crypto AML Enforcement Now?
The penalty includes a partial operational suspension that restricts new user onboarding and fund transfers until lifted. Coinone has 10 days to contest the findings before enforcement is finalized, while CEO Cha Myung-hoon received an official reprimand. The FIU clarified the case remains administrative rather than criminal.
The move follows a broader regulatory tightening across South Korea’s crypto sector after repeated compliance lapses. In March, Bithumb faced a $24 million penalty and a six-month suspension for similar violations, marking a significantly larger sanction. Combined, the actions suggest a coordinated push to raise anti-money laundering standards across exchanges.
Regulators are also responding to operational risks highlighted by recent incidents. A high-profile error at Bithumb saw 620,000 Bitcoin mistakenly distributed instead of 620,000 Korean won, exposing weaknesses in internal controls. The Bank of Korea has since urged lawmakers to introduce trading curbs during abnormal activity and require exchanges to reconcile asset balances every five minutes instead of daily cycles.
Can exchanges maintain rapid growth under tighter compliance constraints? Authorities are prioritizing oversight as trading volumes and systemic risks increase, particularly in volatile market conditions.
Further policy developments may hinge on legislative action to formalize trading halts and stricter reporting standards. The next catalyst will be whether South Korea’s proposed rules reshape operational models for domestic exchanges or prompt consolidation across the sector.
