South Korea’s financial regulators issued a multi-billion-won fine and three-month business suspension against Coinone after an investigation into systemic anti-money laundering failures.
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- Coinone is set to pay a fine of 5.2 billion won and undergo a partial three-month suspension for failing to verify the identity of nearly 70,000 users.
- The Financial Intelligence Unit linked the exchange to more than 10,000 unauthorized transactions with unregistered foreign platforms despite receiving multiple official warnings.
Korea Times, Chosun, and Yonhap News I mentioned On Monday, the Financial Intelligence Unit (FIU) discovered nearly 70,000 cases in which the exchange failed to verify users’ identities.
Investigators also found that Coinone processed more than 10,000 transactions involving 16 unregistered foreign exchanges, allegedly ignoring several advance warnings from authorities.
Beyond the identity vulnerabilities, the FIU accused the exchange of exceeding 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 penalty of 5.2 billion won ($3.5 million) and a partial freeze of its operations. This suspension specifically prohibits the exchange from onboarding new clients or allowing them to move funds until the restriction expires.
While the exchange’s CEO, Cha Myung-hoon, received a formal reprimand, the FIU clarified that this remains an administrative enforcement and not a criminal charge.
The action against Coinone is the second major intervention in a month, following a $24 million fine and six-month suspension handed to Bithumb in March over similar compliance lapses.
Coinone has 10 days to formally challenge the results before the FIU finalizes the sanctions.
This push for tighter control comes on the heels of a terrible mistake he made Beethumbanother major exchange, accidentally sent customers 620,000 bitcoins — worth $42 billion — instead of the intended 620,000 Korean won.
The Bank of Korea is now urging the legislature to adopt stricter oversight, suggesting that “legislators should consider imposing trade restrictions to suspend trading if unusual activity occurs or if cryptocurrency prices suddenly fluctuate.”
New operational standards now require platforms reconciliation Their internal records with the actual ownership of assets every five minutes. This replaces the previous 24-hour cycle, which organizers said was too slow to detect discrepancies.
Moreover, the Bank of Korea Suggested Lawmakers give exchanges the ability to freeze trading during periods of extreme volatility or suspicious activity.
