South Korea Extends Bithumb Crypto Exchange Probe Until April 18

The South Korean Financial Intelligence Unit (FIU) has extended its on-site inspection of the Bithumb crypto exchange, with plans to begin a similar probe at Coinone next week. The FIU, which operates under the Financial Services Commission (FSC), initially started its investigation on March 17 and was scheduled to conclude on March 28. However, the probe has been extended and is now set to wrap up on April 18. The primary focus of the investigation is to ensure that the exchanges are compliant with anti-money laundering protocols.

Bithumb is the fourth exchange to undergo this inspection, following Korbit, GOPAX, and Upbit. The investigation of Upbit revealed several violations of Know-Your-Customer (KYC) verification protocols, leading to a three-month suspension by the FSC. This suspension was later temporarily lifted by a branch of the Seoul Administrative Court for 30 days.

An anonymous official from an unnamed domestic crypto exchange suggested that the extension of the Bithumb probe may be due to the vast amount of data the FIU is reviewing. However, there is also a suspicion that the delay could be related to a specific transaction involving Bithumb wallets transferring a significant amount of coins to an unregistered exchange.

The FIU is scheduled to begin its on-site inspection at Coinone on April 21. Coinone will be the last of South Korea’s five fiat KRW-trading exchanges to face the FIU probe. The Financial Supervisory Service (FSS) has also conducted investigations at Bithumb and Coinone, uncovering instances of misused company funds and irregular transactions.

The FSS investigation at Bithumb revealed that a former CEO and a current advisor had misused company-provided apartment deposits to lease properties to third parties. The Seoul Southern District Prosecutors’ Office’s crypto investigation team followed up with a raid on Bithumb’s headquarters last month. Coinone faced its own FSS probe late last year following a significant price spike in the MOVE token on its platform.

These regulatory actions underscore the heightened scrutiny that crypto exchanges in South Korea are facing, with authorities focusing on compliance with anti-money laundering regulations and the proper handling of company funds. The extended probe at Bithumb and the upcoming inspection at Coinone indicate that regulators are taking a thorough approach to ensure that exchanges adhere to the necessary protocols and standards.