South Korea fines Coinone $3.5M, imposes suspension over AML failures
Summary
Coinone faces a 5.2 billion won ($3.5M) fine and a three-month partial suspension for AML violations.
Regulators found ~70,000 cases of unverified user identities and over 10,000 unauthorized cross-border transactions.
The action follows a broader regulatory crackdown after similar penalties on Bithumb.
South Korean regulators have taken enforcement action against Coinone, imposing a 5.2 billion won ($3.5 million) fine along with a three-month partial business suspension after uncovering widespread anti-money laundering (AML) failures.
The country’s Financial Intelligence Unit (FIU) identified around 70,000 instances where the exchange failed to properly verify user identities, a core compliance requirement. Investigators also flagged more than 10,000 transactions conducted with 16 unregistered foreign platforms, despite prior regulatory warnings.
Authorities further accused the exchange of bypassing due diligence by marking incomplete customer profiles as verified and allowing unverified users to continue trading.
Suspension and regulatory response
As part of the penalty, Coinone will be temporarily restricted from onboarding new users and processing fund transfers for new accounts during the three-month suspension period. CEO Cha Myung-hoon has received an official reprimand, though the FIU clarified the action remains administrative rather than criminal.
Coinone has been given 10 days to appeal before the sanctions are finalized.
Crackdown intensifies
The move marks the second major enforcement action in recent weeks, following a $24 million fine and six-month suspension imposed on Bithumb for similar compliance lapses.
Regulatory pressure has intensified after a high-profile operational error at Bithumb, where users were mistakenly credited with 620,000 Bitcoin instead of 620,000 Korean won.
In response, the Bank of Korea is urging stricter oversight, including faster reconciliation requirements — now reduced to five-minute intervals — and proposals to allow exchanges to halt trading during extreme volatility or suspicious activity.
Bottom line:
South Korea is accelerating its crypto crackdown, signaling zero tolerance for AML failures as it tightens oversight of domestic exchanges.
