Bithumb Hit With Record $24.6M Fine for 6.65M Violations
South Korea's Financial Intelligence Unit (FIU) has levied a record 36.8 billion won ($24.6 million) fine against crypto exchange Bithumb for widespread compliance failures. The penalty stems from approximately 6.65 million violations of the country's anti-money laundering (AML) and customer verification rules, uncovered during on-site inspections conducted between 2024 and 2025. The breaches included 3.55 million instances of failed customer identity verification and 3.04 million cases where the exchange failed to block transactions as required by law.
In addition to the fine, which is the largest ever imposed on a South Korean virtual asset exchange, regulators ordered a six-month partial suspension of services for new users. The sanctions also included personnel penalties, with Bithumb's CEO, Lee Jae-won, receiving a formal reprimand warning and the exchange's chief reporting officer being suspended for six months. The action underscores a broader regulatory tightening that previously saw rival Upbit fined 35.2 billion won in 2025 for similar compliance gaps.
CEO Reappointment Vote Proceeds Despite Major Bitcoin Glitch
Despite the severe regulatory actions, Bithumb plans to ask shareholders to reappoint CEO Lee Jae-won for another two-year term at a meeting on March 31. The leadership controversy is compounded by a recent and significant operational blunder. During a promotional event, Bithumb staff mistakenly set the payment unit to Bitcoin (BTC) instead of Korean won (KRW), accidentally distributing what was reported as up to 2,000 BTC per user—worth hundreds of billions of won at the time.
The error triggered a flash crash on the platform, causing Bitcoin's price to plummet over 10% below the broader market before recovering. While Bithumb stated the incident resulted in no customer losses, it exposed critical weaknesses in the exchange's internal controls under its current leadership. The push to retain the CEO in the face of such regulatory and operational failures signals a potential conflict between the company's management and its compliance obligations.
Korean Crypto Market Faces Intensifying Regulatory Pressure
The penalties against Bithumb are part of a concerted effort by South Korean authorities to enforce stricter oversight on the country's digital asset market. The on-site inspections covered the nation's five largest exchanges: Upbit, Bithumb, Coinone, Korbit, and Gopax. This systematic review demonstrates regulators' low tolerance for AML and KYC deficiencies, which they view as critical for maintaining market trust.
Even with the regulatory headwinds, market data shows strong domestic demand persists. Bithumb recorded approximately $724 million in 24-hour trading volume, with Korean won-denominated pairs accounting for over 92% of its activity. The exchange's top pairs, including XRP/KRW and BTC/KRW, highlight continued retail and institutional participation. However, the ongoing investigations and operational suspensions may erode user trust and redirect trading volume to competitors in the highly competitive market.
