South Korean financial regulators have imposed a multibillion-won fine and three-month business suspension on Coinone following an investigation into systemic anti-money laundering failures.
Summary
- Coinone is expected to pay a fine of 5.2 billion won and face a three-month partial suspension for failing to verify the identities of around 70,000 users.
- The Financial Intelligence Unit linked the exchange to more than 10,000 unauthorized transactions with unregistered foreign platforms, despite several official warnings.
The Korea Times, Chosun and Yonhap News reported on Monday that the Financial Intelligence Unit (FIU) found around 70,000 cases where the exchange failed to verify users’ identities.
Investigators also found that Coinone processed more than 10,000 transactions involving 16 unregistered foreign platforms, allegedly ignoring several prior warnings from authorities.
Beyond identity flaws, the FIU accused the exchange of circumventing due diligence by marking customer profiles as complete even when vital data was missing and allowing unverified users to continue trading.
Coinone now faces a 5.2 billion won ($3.5 million) penalty and a partial freeze of its operations. This suspension specifically prevents the exchange from onboarding new customers or allowing them to move funds until the restriction expires.
Although the exchange’s CEO, Cha Myung-hoon, received an official reprimand, the FIU clarified that this was an administrative action rather than a criminal charge.
This action against Coinone is the second major intervention in a month, following a $24 million fine and six-month suspension imposed on Bithumb in March for similar compliance failures.
Coinone has 10 days to formally challenge the findings before the FIU finalizes the sanctions.
The push for tighter control follows a high-profile mistake by Bithumb, another major exchange, which accidentally sent its customers 620,000 Bitcoins, valued at $42 billion, instead of the intended 620,000 Korean won.
The Bank of Korea is now urging lawmakers to adopt stricter oversight, suggesting that “lawmakers should consider introducing trading restrictions to suspend trading in cases of unusual activity or if cryptocurrency prices suddenly fluctuate.”
New operational standards now require platforms to reconcile their internal records with actual assets held every five minutes. This replaces the previous 24-hour cycle, which regulators said was too slow to detect deviations.
Additionally, the Bank of Korea suggested that lawmakers grant exchanges the power to freeze trading during periods of extreme volatility or suspicious activity.
