Coinone Hit With $3.5M Fine, 3-Month Suspension Over AML Failures

Lawrence Jengar Apr 14, 2026 06:49

South Korea's FIU orders partial business suspension against Coinone for 70,000 unverified accounts and transactions with 16 unregistered foreign exchanges.

South Korean regulators slapped cryptocurrency exchange Coinone with a 5.2 billion won ($3.5 million) fine and a three-month partial business suspension on Monday, marking the second major enforcement action against a domestic exchange in less than a month.

The Financial Intelligence Unit (FIU), operating under the Financial Services Commission, accused the country's third-largest exchange of failing to verify user identities in approximately 70,000 cases. Coinone allegedly also processed more than 10,000 transactions with 16 foreign exchanges that aren't registered with South Korean regulators—despite repeated warnings from authorities.

What the Suspension Means for Users

The partial business suspension prevents new customers from depositing or withdrawing funds until the ban lifts in three months. Existing users can still trade, but anyone who signed up recently may find their funds locked.

Coinone CEO Cha Myung-hoon received an official reprimand, though this remains an administrative action rather than criminal charges. The exchange has 10 days to dispute the penalties before the FIU finalizes them.

Pattern of Enforcement Intensifies

This follows the FIU's March action against Bithumb, South Korea's second-largest exchange by volume, which received a $24 million fine and six-month partial suspension for similar AML failures. That enforcement came after Bithumb's now-infamous February error where it accidentally sent customers 620,000 BTC—worth roughly $42 billion at the time—instead of 620,000 Korean won.

The Bithumb incident spooked regulators. The Bank of Korea responded by pushing lawmakers to implement trading circuit breakers that would automatically suspend activity during unusual price swings or operational anomalies. Traditional stock markets have used such mechanisms for decades.

Specific Violations

According to The Korea Times, Chosun, and Yonhap News, the FIU cited several compliance failures: marking customer verification as complete when required information was missing, and allowing transactions for users who hadn't completed verification requirements.

South Korea's Virtual Asset User Protection Act, which took effect in June 2025, tightened AML and KYC standards significantly. All exchanges must register with the FIU and enforce the Travel Rule for transactions exceeding 1 million won (about $800), requiring detailed sender and receiver information sharing.

Regulatory Context

Seoul has pursued aggressive crypto oversight since requiring VASP registration in 2021. The recent enforcement wave suggests regulators are done issuing warnings. Two major exchanges facing suspensions within weeks sends a clear message to the remaining platforms: compliance gaps will cost you.

For traders using Korean exchanges, the pattern suggests due diligence on an exchange's regulatory standing matters more than ever. Coinone's 10-day dispute window closes around April 24, when final penalties will be confirmed.

• coinone
• south korea
• aml
• crypto regulation
• exchange suspension