Incoming news from South Korea reports that the Financial Intelligence Unit (FIU) has issued a preliminary notice to Bithumb. The entity has imposed a six-month partial suspension of operations for violating anti-money laundering (AML).
In addition, FIU also notified the company of disciplinary action against its CEO, Lee Jae-won. According to News 1, the Financial Services Commission earlier notified Bithumb of sanctions for violating the Specific Financial Information Act.
Bithumb is under a 6-month partial suspension
The 6-month suspension follows industry troubles, not limited to erroneous Bitcoin transactions. As earlier reported by Cryptopolitan, the exchange mistakenly transferred 620,000 Bitcoin, a number more than 12 times its actual holdings. That mistake, worth around $40 billion – 60 trillion KRW.
Additionally, the FIU flagged the exchange’s handling of unreported overseas virtual asset operators and its failure to follow KYC procedures. The suspension follows a systematic enforcement campaign by South Korean financial regulators aimed at improving compliance in its crypto industry.
A Bithumb official asserts that, “This measure is not a final sanction, but rather a preliminary notice, and there may be some adjustments during the sanctions review. The restriction only applies to new members’ virtual asset transfers and withdrawals.”
What becomes of Bithumb’s CEO?
South Korean lawmakers want Bithumb’s CEO gone. Lee Jae-won, Bithumb’s CEO, admitted to the National Policy Committee that Bithumb reconciles its books with its actual crypto assets only once a day. “The time it takes for Bithumb to align its virtual currency holdings and circulation volume is one day,” he said.
After the $40 billion blunder, the exchange moved to prevent lawsuits, as under civil law, the court would ask the customer to return the original Bitcoin rather than the money.
In an apology statement, Bithumb said, “Bithumb takes this incident very seriously and will do its utmost to prevent recurrence by redesigning the entire asset payment process and enhancing the internal control system.”
The CEO is now paying for every mistake tied to the exchange’s conduct in the last few months. Lee Jae-won is awaiting the final disciplinary verdict that could kick him out of the industry like Terra Labs Do Kwon.
The financial authorities plan to hold a sanctions review committee this month to decide on the degree of sanctions against Bithumb. Sanctions review of Coinone and GOPAX is expected to follow.
South Korea regulators move to protect local investors
Regulators have stepped in to centralize the decentralized crypto space in South Korea. Other than Bithumb, the FIU suspended Dunamu’s operations for 3 months and fined the Upbit operator 35.2 billion won.
As reported by Cryptopolitan, Korbit was also fined 2.73 billion won and issued an institutional warning. Shortly after, South Korea’s Mirae Asset Group acquired a 92% stake in Korbit for $93 million.
Bithumb Nanum PR ploy finds its way to Jeju Island
Following in the footsteps of Korean politicians, Bithumb Nanum, the official corporate social responsibility (CSR) and in-house volunteer organization of Bithumb, held a ‘kimchi-sharing’ event in Jeju.
A Bithumb Nanum official said, “We worked with local welfare institutions to create an opportunity for seniors to eat together and take part in activity programs.” The official added, “We plan to continue expanding social contribution activities linked to local communities.”
Also, on March 6th, it organized a spring sharing event with 30 vulnerable elderly residents at Dongjeju Comprehensive Social Welfare Center in Gujwa-eup, Jeju City.
The program was intended for elderly residents living alone who have difficulty traveling due to geographical conditions.
Source: https://www.cryptopolitan.com/south-koreas-fiu-censures-bithumb-ceo/
