South Korea’s Financial Intelligence Unit (FIU) is intensifying its crackdown on cryptocurrency exchanges following widespread failures to comply with anti-money laundering (AML) and Know Your Customer (KYC) regulations.
Major platforms, including Upbit, Bithumb, Coinone, Korbit, and GOPAX, now face a cycle of heavy fines, business suspensions, and enhanced regulatory scrutiny as the FIU works to reinforce investor protection in a volatile digital asset market.
Audit Findings and Enforcement Process by the FIU
The FIU’s campaign began with comprehensive, on-site inspections across leading exchanges, uncovering systemic lapses in KYC protocols, unreported suspicious transactions, and violations of the Special Financial Transactions Act.
Upbit, South Korea’s leading platform under Dunamu’s operation, received the first penalty. The FIU imposed a ₩35.2 billion (about $25.4 million) fine and a three-month suspension of onboarding and processing transactions for new users after identifying more than 700,000 individual AML/KYC violations.
The FIU is applying a “first-in, first-out” penalty scheme: exchanges receive sanctions in the order of their inspection completion. Korbit, GOPAX, Bithumb, and Coinone, whose reviews ended through 2024 and into early 2025, are next in line for penalties.
Fines for these exchanges may reach into the tens of billions of won, with operational restrictions expected to mirror those imposed on Upbit. Bithumb’s sanction timeline may be delayed while the FIU conducts an additional upper-order book compliance review.
Regulatory Context
This regulatory push reflects South Korea’s attempt to navigate rising trade volumes and delayed crypto tax legislation while serving as a global example of digital asset regulation. The FIU emphasises the need for consistent sanctions regardless of market participation, reaffirming that all transactions, regardless of size, are subject to equal scrutiny under evolving regulations.
Strict regulation may result in higher compliance costs, market consolidation among smaller exchanges, and temporary interruptions for consumers when platforms tighten or halt certain services.
Long-term, the crackdown aims to increase confidence, lower fraud, and strengthen South Korea’s standing as a secure market for digital assets. Once the regulatory dust settles, this might pave the way for further investor engagement.
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