South Korean FIU Investigates Bithumb Over Cross-Border Order Sharing with Australian Exchange Stellar

Executive Summary

South Korea's Financial Intelligence Unit (FIU) is investigating Bithumb, the nation's second-largest cryptocurrency exchange, regarding its order book sharing with Australian exchange Stellar, scrutinizing compliance with anti-money laundering (AML) and customer verification regulations.

The Event in Detail

On September 22, 2025, Bithumb announced the launch of its Tether (USDT) market and simultaneously initiated order book sharing with Australian virtual asset exchange Stellar. Following this announcement, the Korea Financial Intelligence Unit (FIU), operating under the Financial Services Commission (FSC), summoned Lee Jae-won, CEO of Bithumb, for questioning. The FIU's inquiry centers on whether Bithumb adhered to legal requirements and proper procedures for this cross-border arrangement, specifically focusing on the Act on Reporting and Using Specified Financial transaction Information, commonly known as the Special Financial Transactions Information Act.

Regulatory Framework and Compliance

The Special Financial Transactions Information Act imposes stringent regulations on virtual asset business operators, particularly concerning cross-border order book sharing. For such arrangements to be permissible, the involved virtual asset exchanges must possess appropriate authorization, permission, registration, or filing in their respective jurisdictions and diligently fulfill anti-money laundering (AML) obligations. Furthermore, they are required to verify customer information. For Bithumb to legally share its order book with Stellar, it must submit to the FIU a copy of Stellar's license issued by the Australian government, along with Bithumb's detailed procedures and methods for verifying Stellar customer information. Financial authorities have expressed concerns, reportedly viewing Bithumb's fulfillment of these procedural requirements as insufficient. Industry experts highlight the practical challenges in implementing systems for real-time verification of foreign exchange customers within a short timeframe, noting the increased risk of money laundering when domestic and international transactions are processed together.

Business Strategy and Market Positioning

Order book sharing is a mechanism employed by virtual asset exchanges to consolidate buy and sell orders across platforms, thereby enhancing trading volume and overall market liquidity. Bithumb asserted that it proceeded with the order book sharing with Stellar following consultations with financial authorities. However, regulatory bodies emphasize that while order book sharing offers potential benefits in liquidity, it also introduces significant risks, primarily the potential for domestic customer information leakage overseas if shared with unverified entities and the increased potential for illicit transactions. The regulatory scrutiny underscores a divergence between an exchange's strategic pursuit of liquidity and the authorities' mandate for stringent compliance and financial integrity.

Broader Market Implications

This investigation into Bithumb's operations by the FIU carries substantial implications for the broader Web3 ecosystem and corporate adoption trends. In the short term, Bithumb could face penalties or restrictions on its cross-border activities if violations of the Special Financial Transactions Information Act are confirmed. In the long term, this probe is anticipated to set stricter precedents for how South Korean and, potentially, other jurisdictions regulate cross-border cryptocurrency exchange operations. Such precedents could lead to increased compliance costs for exchanges worldwide, particularly concerning Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements for international users. The outcome of this investigation may influence market access, liquidity dynamics, and investor sentiment regarding the viability and regulatory challenges of globalized crypto trading.

Expert Commentary

An industry insider noted the complexities involved in verifying foreign customers in real-time, stating, > "Implementing systems to verify foreign exchange customers in real-time is challenging in a short timeframe. With order book sharing, domestic and international transactions are processed together, which increases the risk of money laundering, making it an issue regulators cannot ignore." This sentiment highlights the significant regulatory concerns surrounding the potential for order book sharing to create channels for money laundering through foreign exchanges.

Broader Context

The investigation into Bithumb reflects a global trend of increasing regulatory scrutiny on cryptocurrency exchanges, particularly those engaging in cross-border activities. As virtual asset markets expand globally, financial authorities are intensifying efforts to ensure compliance with international standards for anti-money laundering and combating the financing of terrorism. This case underscores the ongoing tension between the pursuit of greater liquidity and market efficiency in the crypto sector and the imperative for robust regulatory oversight to safeguard financial systems and consumer interests.