South Korean financial regulators have imposed a 5.2 billion won ($3.5 million) fine on Coinone following a comprehensive investigation into anti-money laundering compliance failures. According to reports from The Korea Times, Chosun, Yonhap News, TradingView News, CoinCentral, and AMBCrypto, the Financial Intelligence Unit (FIU) discovered approximately 70,000 instances where the exchange failed to properly verify user identities during its probe. The regulatory action also includes a three-month partial business suspension that prevents the exchange from onboarding new customers or allowing existing users to move funds until the restriction expires. The partial suspension runs from April 29 to July 28, 2026, during which new customers cannot deposit, withdraw, or conduct external virtual asset transfers for crypto trading purposes, while existing account holders retain full access to trading, deposits, withdrawals, and Korean won transactions. The action followed months of inspections by Korean authorities that reviewed onboarding checks, monitoring controls, and FIU reporting under Korea's specified financial transactions reporting law.
The FIU investigation revealed that Coinone processed 10,113 transactions involving 16 unregistered foreign platforms, allegedly ignoring multiple prior warnings from authorities. As reported by multiple sources, investigators found that the exchange bypassed due diligence requirements by marking customer profiles as complete even when vital data was missing and allowed unverified users to continue trading. The exchange's CEO, Cha Myung-hoon, has received an official reprimand as part of the administrative enforcement action. The violations included approximately 40,000 instances involving unverifiable or incomplete ID documents and around 30,000 cases where users were allowed to trade without completing verification, representing a direct violation of the Act on Reporting and Using Specified Financial Transaction Information. The FIU also alleged that Coinone failed to restrict transactions for customers whose verification measures had not been completed, marking a significant departure from proper anti-money laundering protocols. Regulators found that the exchange missed transactions with common warning signs, including repeated transfers to known high-risk wallets, rapid in-and-out movements, and patterns that resembled mixing activity on certain accounts.
The penalty comes at a critical time as Coinone's financial performance shows strain despite recent growth. According to recent reports, the exchange's revenue rose 3% to $31.4 million but net income collapsed, highlighting the financial pressure from regulatory compliance costs. The three-month suspension creates a direct liquidity shock, as the exchange's recent market share surge past 10% was built on capturing new volume and onboarding fresh capital. During the suspension period, new customers cannot deposit, withdraw, or conduct external virtual asset transfers for crypto trading, effectively disabling the platform's growth engine. While existing users can still trade, the exchange loses its primary lever for expansion and market share capture. This creates a liquidity bottleneck that will likely pressure Coinone's relative market share in the coming months, as competitors without such restrictions continue to capture new volume. The fine represents a relatively small penalty compared to other major exchanges facing similar regulatory pressures, with Coinone joining a growing list of crypto exchanges collectively facing over $50 million in fines in 2026.
The penalty has attracted strategic interest from potential buyers, with Korea Investment Securities exploring a stake in the third-ranked exchange, mirroring Mirae Asset's recent 92% acquisition of Korbit. This trend signals domestic brokerages view crypto exchanges as essential infrastructure, with new ownership rules potentially capping major shareholder stakes at 15-20%. The consolidation trend, accelerated by this penalty, will likely result in a smaller number of larger, better-capitalized exchanges. South Korea's crypto sector is projected to grow at a 17.4% compound annual rate through 2033, creating substantial growth opportunities for compliant players. However, the immediate catalyst is the finalization of the penalty, with the Financial Intelligence Unit confirming the sanctions on April 13 and giving Coinone 10 days to respond before the fine becomes official. The exchange has indicated it will review whether to file an administrative lawsuit after deliberating with its board, insisting it is taking the matter seriously and actively working to fix the compliance gaps.
The Bank of Korea is now urging legislative adoption of stricter oversight measures, including trading curbs to suspend trading during unusual activity or sudden price fluctuations. As reported, new operational standards now require platforms to reconcile internal records with actual asset holdings every five minutes, replacing the previous 24-hour cycle that regulators deemed too slow to detect discrepancies. The central bank has also suggested granting exchanges the power to freeze trading during periods of extreme volatility or suspicious activity. The FIU has been rolling out enforcement actions in the order inspections were completed across the country's major exchanges, with Upbit receiving similar penalties and filing an administrative lawsuit, while Bithumb faced steeper penalties including a reported fine of 36.8 billion won and a six-month partial suspension. This case adds to growing regulatory pressure on crypto exchanges in South Korea, with authorities continuing to tighten AML enforcement across the sector. According to Chainalysis, South Korea is the second-largest crypto market after India in the APAC region, thanks to its 2024 Virtual Asset User Protection Act for regulatory clarity, though domestic players must adhere to strict AML rules and secure user assets or face hefty fines and halted operations.
