South Korea Prepares Major Crypto Exchange Penalties Following AML Investigation

The Korea Financial Intelligence Unit (FIU) plans to sanction Korbit, Gopax, Bithumb, and Coinone following a year-long investigation that has already resulted in a $24 million fine against Upbit operator Dunamu.

Dunamu Sets the Precedent with $24 Million Fine

The FIU completed a 35.2 billion won fine against Dunamu in November 2025, marking the first major penalty in this enforcement wave. The company, which operates South Korea’s largest crypto exchange Upbit, violated customer identification rules in over 8.6 million cases.

The violations included serious compliance failures. Dunamu accepted photocopies and re-photographed images instead of original identity documents from users. The company also allowed 3.3 million transactions by customers who had not completed proper verification. Additionally, Dunamu failed to report 15 suspicious transactions to authorities as required by law.

The penalty included more than just the fine. The FIU imposed a three-month business suspension on Upbit’s operations related to the violations. Company executives also received disciplinary warnings from regulators. This comprehensive approach shows how seriously South Korean authorities take these violations.

Sequential Enforcement Following Inspection Timeline

The FIU conducted inspections at major exchanges throughout 2024 and 2025 using a systematic approach. Regulators are now applying penalties in the same order as their inspections, which industry experts call a “first-in, first-out” method.

The inspection timeline followed this sequence:

• Dunamu (Upbit): August 2024

• Korbit: October 2024

• GOPAX: December 2024

• Bithumb: March 2025

• Coinone: April 2025

Industry sources expect the violations at other exchanges to mirror those found at Dunamu. This means similar penalties are likely coming for the remaining platforms. Crypto exchanges across South Korea have faced increasing regulatory pressure, with the number of registered platforms dropping 26% in recent years.

Heavy Penalties Expected Across the Industry

Financial intelligence officials indicate that penalties for the remaining exchanges will be substantial. Industry insiders suggest fines could reach hundreds of billions of Korean won across all sanctioned platforms. The severity will depend on how many violations regulators find at each exchange.

The enforcement process involves legal reviews and sanctions committee meetings for each company. These procedural requirements have pushed back the original timeline. While authorities initially planned to complete all sanctions by late 2025, most penalties are now expected by the first half of 2026.

Source: @WuBlockchain

Bithumb may face additional delays due to ongoing investigations. The exchange requires a second inspection, which could extend its timeline even further. Meanwhile, Coinone is expected to receive its penalty shortly after legal reviews conclude.

Broader Impact on South Korea’s Crypto Market

These enforcement actions come during a challenging period for South Korea’s cryptocurrency industry. The government has repeatedly delayed implementing a crypto tax regime, most recently pushing the 20% tax on crypto gains from January 2025 to 2027 following bipartisan agreement in December 2024.

Political instability has also affected regulatory progress. Recent martial law declarations and impeachment proceedings have delayed comprehensive crypto legislation. The National Assembly has postponed discussions on initial coin offerings, real-name trading accounts, and Bitcoin ETFs until political conditions stabilize.

Despite enforcement challenges, South Korea proposed the Digital Asset Basic Act in June 2025. This proposed legislation would establish licensing requirements for stablecoins and transparency standards aimed at aligning with global anti-money laundering frameworks.

International Implications and Market Response

South Korea’s aggressive enforcement approach could influence regulatory strategies in other countries. The systematic nature of these inspections and penalties demonstrates how financial authorities can balance innovation with compliance requirements.

The penalties send a clear message that South Korea will not tolerate lax anti-money laundering practices in its crypto industry. Global regulators are watching how this enforcement wave affects market stability and industry behavior.

Crypto markets have shown mixed reactions to the enforcement news. While some investors worry about increased regulatory pressure, others view stronger compliance standards as positive for long-term industry development. The penalties could ultimately strengthen investor confidence by ensuring exchanges meet international standards.

Exchange operators now face pressure to review their compliance systems before receiving formal sanctions. Companies that proactively address anti-money laundering gaps may receive more favorable treatment from regulators.

The Compliance Reckoning Ahead

South Korea’s systematic approach to crypto exchange enforcement marks a turning point for the industry. With billions of won in fines on the horizon, exchanges must choose between upgrading their compliance systems or facing severe business restrictions. This enforcement wave will likely reshape South Korea’s crypto landscape while setting new standards for regulatory oversight in digital asset markets worldwide.