South Korea’s Financial Intelligence Unit is preparing to hit several local crypto exchanges with penalties after finding lapses in their anti‑money laundering controls.
Summary
- South Korea’s FIU is preparing penalties for more domestic exchanges after fining Upbit 35.2 billion won for AML violations.
- Offshore platforms like KuCoin were also blocked earlier this year for operating without registration and basic compliance safeguards.
Sources familiar with the development have told local media that the financial crime agency wants to intensify pressure on exchanges it has deemed negligent or systematically non-compliant.
The FIU will continue its enforcement drive that began with Dunamu, which operates Upbit, South Korea’s largest regulated crypto exchange. The investigation into Upbit marked the first in a series of on-site compliance inspections targeting major trading platforms.
Since last year, the FIU has been investigating compliance lapses by conducting direct inspections to determine whether exchanges have followed core regulatory mandates, starting with Dunamu, which was inspected in August of 2024.
After the investigation found millions of compliance failures related to KYC and AML standards, the agency doubled down on its battle against illicit finance and money laundering and subsequently moved on to exchanges like Korbit, GOPAX, Bithumb, and Coinone.
Dunamu was slapped with a three-month suspension on new user deposits and withdrawals, and a hefty fine of 35.2 billion won was added to the penalty earlier this month.
Industry sources believe the same fate may befall the other four exchanges, as these platforms were inspected under the same criteria and are expected to show similar gaps in their compliance programs, which would determine the severity of the punishment.
Sources also said that the FIU will issue sanctions in the order it has completed on-site inspections, and based on that timeline, Korbit could be next in line to receive enforcement action.
Based on past estimates, these fines could stack up to hundreds of billions of won in total. With 2025 coming to an end, insiders expect decisions on the remainder of the cases to be finalized by the first half of 2026.
Crypto industry in check
Offshore exchanges have been battling a regulatory crackdown of their own while operating in South Korea. At least 14 foreign platforms, including KuCoin, were blocked by the government earlier this year for not having registered with the FIU.
To safeguard investors, the authorities blocked complete access to these exchanges via official websites or mobile apps. Many of these platforms were also found to be structurally non-compliant and lacking even basic KYC safeguards.
Other areas the agency has focused on include the fee structures for domestic crypto exchanges in a bid to lower consumer burdens and improve pricing transparency. Meanwhile, South Korea’s Financial Services Commission has temporarily suspended crypto lending services across the industry due to the absence of legal guidelines and the risks posed to retail users.
