Key Takeaways
- Bithumb might become the third South Korean exchange to face heavy penalties.
- The FIU has concluded its year-long inspections and is now handing out sanctions and penalties.
- Earlier, Upbit and Korbit faced hefty fines and sanctions for issues related to user onboarding.
Bithumb, South Korea’s second-largest crypto exchange by trading volume, underwent its Financial Intelligence Unit (FIU) inspection in March 2025 and has now been fined heavily for anti-money laundering (AML) violations.
The FIU review uncovered multiple compliance failures at Bithumb, including breaches of AML protocols, inadequate know-your-customer (KYC) processes, and lapses in suspicious transaction reporting.
Bithumb To Face Multi-Million Dollar Fine?
Bithumb may face significant penalties similar to those of Upbit and Korbit, depending on the type and number of violations.
While the exact fine amount remains pending an official announcement as of January 2026, industry reports confirm the identification of systemic AML failures similar to those at Upbit and Korbit.
Bithumb is poised to receive a substantial fine, with estimates suggesting it could rival or exceed Upbit’s $25 million penalty, given Bithumb’s market share and the additional investigation into the order book.
Reports from November 2025 indicate that the FIU has completed audits and is proceeding to sanctions.
These violations include:
- Customer Due Diligence (CDD) Failures: Incomplete or inadequate verification of user identities, such as unclear personal information, improper address checks, and a lack of enhanced due diligence for high-risk customers. This mirrors Upbit’s 5.3 million CDD breaches and Korbit’s 12,800 cases.
- Transaction Restriction Breaches: Allowing trades by unverified users, violating rules that prohibit services until full KYC is completed. Comparable to Korbit’s 9,100 instances and Upbit’s 3.3 million breaches.
- Failure to Report Suspicious Transactions: Delays or omissions in flagging and reporting unusual activities to authorities, a core requirement under the Special Act. Upbit missed 15 such reports, suggesting a pattern across exchanges.
- Dealing with Unregistered VASPs: Supporting transactions with overseas or domestic providers not registered with the FIU, increasing risks of cross-border money laundering.
- Additional Scrutiny on Order Book Operations: Unlike Upbit and Korbit, Bithumb faces extra probes into its order book management, potentially involving manipulative practices or insufficient monitoring, which could amplify the severity of penalties.
These issues stem from “repeated or structural weaknesses” rather than isolated errors, as noted in FIU statements.
The high volume of violations, potentially in the millions, based on Upbit’s scale, reflects inadequate internal controls despite Bithumb’s market dominance.
South Korea’s Regulatory Purge
South Korea’s FIU has intensified its scrutiny of major exchanges to ensure compliance with AML and KYC rules.
The latest set of penalties is part of the broader wave of audits targeting the “Big Five” exchanges: Upbit, Bithumb, Coinone, Korbit, and GOPAX.
Exact details will be finalized after Bithumb submits its response to the FIU’s findings, with the process expected to conclude in early 2026.
This aligns with the regulator’s methodical rollout, emphasizing deterrence over disruption.
Bithumb’s case stands out due to its additional order book probe, which could lead to harsher penalties.
However, like its peers, the violations appear to be rooted in rapid growth outpacing the compliance infrastructure.
Prashant Jha is a seasoned crypto journalist based in Delhi, India, with a Bachelor’s Degree in Computer Science Engineering. Passionate about the evolving world of blockchain and cryptocurrencies, he has been a dedicated voice in the industry since 2018. Prashant’s expertise lies in regulatory reporting, where he unravels complex legal and financial developments with clarity and precision. Before joining CCN in 2024, he honed his craft at Cointelegraph, establishing himself as a trusted name in crypto journalism.
His coverage spans major industry events, including the high-profile collapses of FTX, Three Arrows Capital (3AC), and LUNA, offering readers insightful analyses of their regulatory and market implications. Prashant’s technical background enables him to bridge the gap between intricate blockchain technology and its real-world applications, making his work accessible to novices and experts.
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