South Korean financial regulators have issued a multi-billion won fine and a three-month business suspension against Coinone following a probe into systemic anti-money laundering failures.
Summary
- Coinone is set to pay a 5.2 billion won fine and undergo a three-month partial suspension for failing to verify roughly 70,000 user identities.
- The Financial Intelligence Unit linked the exchange to over 10,000 unauthorized transactions with unregistered foreign platforms despite receiving multiple official warnings.
The Korea Times, Chosun, and Yonhap News reported on Monday that the Financial Intelligence Unit (FIU) discovered roughly 70,000 instances where the exchange failed to verify user identities.
Investigators also found that Coinone processed over 10,000 transactions involving 16 unregistered foreign platforms, allegedly ignoring multiple prior warnings from the authorities.
Beyond the identity lapses, the FIU accused the exchange of bypassing due diligence by marking customer profiles as complete even when vital data was missing and allowing unverified users to continue trading.
Coinone now faces a 5.2 billion won ($3.5 million) penalty and a partial freeze on its operations. This suspension specifically blocks the exchange from onboarding new customers or allowing them to move funds until the restriction expires.
While the exchange’s CEO, Cha Myung-hoon, has received an official reprimand, the FIU clarified that this remains an administrative enforcement rather than a criminal charge.
This action against Coinone is the second major intervention in a month, following a $24 million fine and a six-month suspension handed to Bithumb in March for similar compliance gaps.
Coinone has 10 days to formally contest the findings before the FIU finalizes the penalties.
This push for tighter control follows a high-profile blunder by Bithumb, another major exchange, which accidentally sent customers 620,000 Bitcoin—valued at $42 billion—rather than the intended 620,000 Korean won.
The Bank of Korea is now urging the legislature to adopt stricter oversight, suggesting that “lawmakers should consider introducing trading curbs to suspend trading in the event of unusual activity or if crypto prices suddenly fluctuate.”
New operational standards now require platforms to reconcile their internal records with actual asset holdings every five minutes. This replaces the previous 24-hour cycle, which regulators argued was too slow to catch discrepancies.
Furthermore, the Bank of Korea has suggested that lawmakers grant exchanges the power to freeze trading during periods of extreme volatility or suspicious activity.
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