South Korea's Crackdown on Crypto: Penalties Indicate Shift Toward Banking-Level Regulations

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South Korea's Crackdown on Crypto: Penalties Indicate Shift Toward Banking-Level Regulations

Bitget-RWA2025/11/24 10:30

By:Bitget-RWA

- South Korea's FIU penalizes major crypto exchanges for AML violations, including Upbit's 35.2B won fine and service suspensions. - Enforcement follows a "first-in, first-out" approach, targeting Korbit, Gopax, Bithumb, and Coinone with similar sanctions. - Aiming to align crypto with traditional finance, strict KYC/AML rules and global regulatory trends are driving the crackdown.

South Korea's Financial Intelligence Unit (FIU) is intensifying its crackdown on major cryptocurrency exchanges, focusing on breaches of anti-money laundering (AML) laws. This campaign, which started with audits of exchanges such as Upbit, Bithumb, and Korbit, has already led to hefty penalties, including a 35.2 billion won ($24.35 million) fine for Upbit’s parent company, Dunamu, and

a three-month halt on essential services

. The FIU is now set to impose comparable measures on Korbit, Gopax, Bithumb, and Coinone,

after a year-long investigation

that revealed widespread compliance shortcomings.

This regulatory sweep is being carried out in a systematic "first-in, first-out" manner, with checks rolling out sequentially since August 2024. Dunamu, as the first to be reviewed, set the standard for subsequent penalties, while

Korbit and Gopax, next on the list

for enforcement, are likely to be sanctioned in the near future. Bithumb and Coinone, which underwent inspection later, may experience delays due to further examination of Bithumb’s order book system

as noted by Blockonomi

. Industry observers expect that the fines will be similar to those levied on Dunamu, with both monetary penalties and operational limits anticipated for all major exchanges

as reported by Coinpedia

The FIU’s enforcement is part of a larger push to bring the crypto industry in line with conventional financial rules. South Korea now requires exchanges to implement strict KYC procedures and AML reporting, with

violations resulting in harsh penalties

, such as fines up to five times the illegal profits and possible imprisonment. This regulatory push is designed to stabilize the market before the rollout of new crypto-related financial products and to address illegal financial activities. Overseas exchanges like KuCoin have also come under the spotlight, with

unlicensed operations being shut down

earlier this year.

Authorities anticipate that most penalties will be finalized by mid-2026, though

Bithumb’s case may be delayed

and could take longer to resolve. This schedule coincides with the postponed implementation of South Korea’s crypto tax policy,

now planned for January 2027

, and ongoing discussions about how to balance regulatory oversight with technological innovation. Experts believe these sanctions could alter the competitive landscape,

possibly resulting in temporary shutdowns

or changes to licenses for exchanges that fail to comply.

This wave of enforcement is part of a broader international movement to tighten crypto oversight, with South Korea joining the U.S. and EU in emphasizing AML standards. The FIU’s particularly tough stance, marked by

financial penalties and business restrictions

sends a strong signal: crypto platforms are expected to meet the same regulatory requirements as traditional financial institutions. As the industry prepares for increased scrutiny, the results of these actions are likely to shape regulatory norms for 2026 and beyond.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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