South Korean crypto exchange Coinone has been hit with a multi-million-dollar fine and a business suspension after regulators found serious anti-money-laundering (AML) failures at the platform. The decision raises pressure on local exchanges to treat compliance like traditional financial institutions do.
Coinone Fined and Ordered to Halt Part of Its Business
South Korean authorities penalized Coinone around $3.5 million for AML violations and insufficient internal procedures. Additionally, authorities temporarily banned certain operations at Coinone while they took corrective action, limiting the company’s capacity to serve new clients.
According to officials, Coinone did not create and maintain efficient systems to identify and report questionable activities. They contend that, despite increased trading volumes and user numbers, the exchange treated AML as a formality rather than a primary risk area.
Regulators reached their conclusion after months of inspections that examined Coinone’s onboarding procedures, transaction tracking, and reporting to Korea’s Financial Intelligence Unit (FIU). In accordance with Korea’s Act on Reporting and Using Specified Financial Transaction Information, regulators found that these procedures did not meet the standards.
What Regulators Say Coinone Did Wrong
Investigators found that Coinone’s customer due diligence process failed to flag higher‑risk accounts and sources of funds. In some cases, users could deposit and trade large amounts without proper verification of occupation, income, or links to sanctioned regions.
Additionally, the exchange failed to notify suspicious transactions that displayed common warning signs, such as frequent transfers to recognized high-risk wallets, fast in-and-out movements, and the utilization of mixing-style patterns. Coinone allegedly permitted accounts to continue trading on many occasions while compliance personnel were still examining notifications.
Regulators pointed out weaknesses in continuous monitoring, claiming that Coinone failed to update risk profiles in response to shifts in user behavior. Additionally, they faulted inadequate documentation and staff training, which made it more difficult to demonstrate that AML decisions adhered to any uniform standard.
Authorities suspended certain Coinone services for a predetermined amount of time in addition to the fee. Until repairs are confirmed, this suspension usually prohibits opening new accounts, certain fiat on-ramps, or particular items deemed greater risk.
Coinone can often keep providing basic services to current users, but it must adhere to certain guidelines. These frequently entail hiring outside auditors, providing frequent reports, and demonstrating the use and efficacy of new AML instruments.
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