Seoul court halts Bithumb suspension over risk to core functions

The Seoul Administrative Court on Thursday granted an emergency injunction that blocks enforcement of a six-month partial business suspension and a related fine on cryptocurrency exchange Bithumb while the case moves toward a final ruling. Judge Gong Hyeon-jin issued the stay pending further proceedings.

Bithumb asked the court on March 23 to cancel both the suspension and a 36.8 billion won fine that were set to take effect March 27. The penalties were imposed in March by the Financial Intelligence Unit, which alleged 6.65 million violations of anti-money-laundering rules, including about 3.55 million failures to verify customer identities and about 3.04 million failures to block restricted transactions. The FIU operates under the Financial Services Commission and had signaled disciplinary action against Bithumb’s CEO.

In explaining the injunction, the court wrote that while trading inside the exchange and conversions between Korean won and cryptocurrencies could continue, “inter-exchange transactions and external virtual asset transfers are also core functions.” The ruling said limits on those functions “are expected to cause difficulties in attracting new customers.” The court also noted upcoming regulatory changes that will allow listed corporations and registered professional investment corporations to enter the virtual asset market, and said the sanctions could harm Bithumb’s ability to secure those clients.

The injunction temporarily prevents enforcement of the sanctions while the court evaluates whether they should stand. The underlying allegations are not resolved; if a final ruling upholds the FIU’s sanctions, the suspension and fine could be reinstated.

Founded in 2014, Bithumb is one of South Korea’s largest cryptocurrency exchanges. The company issued a statement saying it will “faithfully present” its position during the remaining legal proceedings.

The court action follows recent incidents and regulatory developments affecting the industry. In February the exchange mistakenly credited hundreds of users with 2,000 BTC instead of 2,000 won during a promotion, an error valued at roughly $43 billion at the time; Bithumb later moved to recover Bitcoin from users who did not return the funds. South Korean authorities have also halted crypto lending services across the industry, citing concerns about leverage.