South Korea’s Financial Intelligence Unit (FIU) has decided to extend its on-site investigation of the Bithumb crypto exchange, with a Coinone inspection slated to commence next week. According to a report by the media outlet Daehan Kyungjae, the FIU, under the oversight of the Financial Services Commission (FSC), is expected to conclude its probe on April 18.
Initially scheduled to wrap up on March 28, the investigation, which began on March 17, is primarily focused on assessing exchanges’ adherence to anti-money laundering protocols. Following Bithumb, Coinone will be the final fiat KRW-trading exchange in South Korea to undergo the FIU scrutiny.
The regulator has already completed its on-site examinations of three other exchanges – Korbit, GOPAX, and Upbit, the largest exchange in the market. Notably, the Upbit investigation uncovered several violations related to Know-Your-Customer (KYC) verification, leading to a three-month penalty imposed by the FSC. However, in late March, the Seoul Administrative Court temporarily suspended the ban for 30 days.
An unnamed source from a local crypto exchange suggested that the FIU’s extension might be a result of the extensive data analysis being conducted. There were suspicions raised about a specific transaction involving Bithumb wallets transferring over 60 million coins, valued at around 22.4 billion won (approximately $15.8 million) to an unregistered exchange.
The FIU’s inspection at Coinone is set to kick off on April 21, following the conclusion of the ongoing investigation at Bithumb. Additionally, the Financial Supervisory Service (FSS) had recently completed its examinations at both Bithumb and Coinone. The FSS probe revealed that Bithumb had misappropriated company funds for housing allowances.
Moreover, a former Bithumb CEO and a current advisor allegedly utilized company-provided apartment deposits to lease a property to a third party. The authorities suspect that one executive used a KRW 1.1 billion deposit from Bithumb to rent out a property, resulting in rent payments totaling approximately $2 million.
In a separate incident, Coinone underwent an FSS investigation last year following a significant spike in the price of the MOVE token on the platform. The Seoul Southern District Prosecutors’ Office’s crypto investigation team also conducted a raid on Bithumb’s headquarters last month.
The regulatory scrutiny underscores the commitment of South Korean authorities to ensure compliance and transparency within the cryptocurrency exchange sector. As the investigations progress, market participants are closely monitoring the developments for potential implications on the industry.
