- The company is also accused of neglecting to limit transactions for clients whose verification steps were not completed.
- Until the three-month partial business restriction is removed, new users are unable to deposit or withdraw money from the exchange.
According to local local media reports, Coinone, the third-largest cryptocurrency exchange in South Korea, is facing fines and a partial business suspension due to anti-money laundering violations.
Coinone was reportedly held by South Korea’s Financial Intelligence Unit (FIU) under the Financial Services Commission for noncompliance with anti-money laundering requirements, including the failure to verify user identities in around 70,000 instances, according to Monday’s reports in The Korea Times, Chosun, and Yonhap News.
In addition, the FIU said that, despite several warnings, Coinone enabled over 10,000 transactions with 16 offshore exchanges that were not registered with South Korean authorities.
The company is also accused of neglecting to limit transactions for clients whose verification steps were not completed and of classifying customer verification as complete while critical information was lacking, both of which constitute violations of customer due diligence responsibilities.
Enforcing Stringent Regulations
Following March’s $24 million fine and six-month partial suspension at Bithumb—the country’s second-largest crypto exchange by trading volume—for alleged anti-money laundering violations, this is the second regulatory action against exchanges in the last month to occur in South Korea.
Following an error by Bithumb, which resulted in the incorrect delivery of 620,000 Bitcoin to consumers (equivalent to around $42 billion at the time) rather than 620,000 Korean won, the Bank of Korea pushed for the adoption of stricter regulations on exchanges.
On Monday, the central bank suggested that legislators introduce measures to halt trading in the case of anomalous behavior or abrupt fluctuations in cryptocurrency values by instituting trading limitations. Until the three-month partial business restriction is removed, new users are unable to deposit or withdraw money from the exchange, and Coinone was fined 5.2 billion won ($3.5 million) by the FIU.
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