South Korea fines Coinone $3.5M, halts new deposits for 3 months

South Korea’s Financial Intelligence Unit fined Coinone 5.2 billion won ($3.5 million) and ordered a three-month partial suspension that bars new customers from depositing or withdrawing funds after finding widespread anti-money-laundering compliance failures.

The FIU found the exchange failed to verify user identities in about 70,000 cases, recorded verification as complete when required information was missing, and did not block transactions for customers with incomplete verification. Regulators also concluded Coinone facilitated more than 10,000 transactions with 16 foreign trading platforms not registered with South Korean authorities despite repeated warnings.

The penalty is administrative. Coinone’s chief executive, Cha Myung-hoon, received an official reprimand. The exchange has 10 days to file an objection before the FIU finalizes the fine and the suspension.

Existing customers may continue to use their accounts; the suspension applies to deposits and withdrawals by new customers only. The FIU’s order restricts onboarding while the exchange reviews its compliance procedures.

The enforcement follows a recent action against another major exchange Bithumb, which earlier this year was fined and given a six-month partial suspension for alleged AML failures. That case followed an operational error in which large cryptocurrency transfers were sent in error, prompting the Bank of Korea to urge lawmakers to consider trading circuit breakers to allow suspending trading during unusual activity or sudden price swings.