South Korea’s FIU Proposes Bithumb’s 6-Month Suspension Over AML Failures

• FIU proposes partial suspension of Bithumb operations over AML compliance gaps.
• Disciplinary actions against CEO Lee Jae-won signal tightening crypto regulations.

South Korea's Financial Intelligence Unit (FIU) has escalated its regulatory oversight, proposing a six-month suspension of operations for cryptocurrency exchange Bithumb due to anti-money laundering (AML) violations. On March 9, 2026, ChosunBiz reported on the preliminary notice targeting compliance failures, including deficiencies in Know Your Customer (KYC) procedures and mishandling of transactions with unregistered overseas virtual asset operators.

The FIU initiated an investigation into Bithumb following an audit in March 2025 that uncovered significant compliance gaps. Reports from Cryptopolitan revealed key issues, such as inadequate systems to block unverified users and delays in reporting suspicious activity. According to BingX, violations discovered during the audit culminated in the suspended operations proposal previewed on January 3, 2026.

If approved, the suspension would primarily affect new users, disallowing the transfer or withdrawal of virtual assets during the six-month period. Existing users, however, are expected to retain access to trading as well as deposits and withdrawals in Korean won. The measure aims to mitigate identified risks while maintaining service stability for current customers.

As part of the sanctions, the FIU has recommended disciplinary actions against Bithumb's CEO, Lee Jae-won, including a formal reprimand and the possible dismissal of the chief reporting officer. The Korea Times reported on February 10, 2026, that Lee was already under scrutiny following allegations of Bitcoin misallocation at the exchange. In a hearing the next day, MEXC News detailed Lee’s admission to lawmakers that Bithumb conducted daily reconciliations between its internal ledgers and actual cryptocurrency holdings.

A sanctions review committee is slated to finalize its decision on the proposed measures later in March 2026. This regulatory pressure on Bithumb reflects a broader push by South Korean authorities to enhance compliance within the cryptocurrency industry, which has seen similar penalties imposed on competitors such as Upbit and Korbit.