- Coinone faces $3.5 million fine after major compliance failures uncovered
- Regulators impose restrictions as South Korea tightens crypto oversight rules
- Verification lapses and overseas transactions trigger enforcement against major exchange
South Korea has escalated its crackdown on crypto compliance failures after penalizing Coinone over major verification lapses. Authorities imposed a hefty fine and operational limits, signaling stricter enforcement across the sector. The decision reflects growing regulatory pressure on exchanges to strengthen internal controls and align with anti-money laundering standards.
According to reports, the Financial Intelligence Unit moved against Coinone following a series of compliance breaches. The regulator cited widespread failures in identity verification and improper handling of transactions involving foreign platforms. Consequently, the exchange now faces a financial penalty of 5.2 billion won, equivalent to about $3.5 million.
Additionally, regulators ordered a three-month partial suspension that will directly impact new user activity. During this period, new customers cannot deposit or withdraw funds for trading. However, existing users will continue accessing normal services without disruption. This distinction aims to limit market shock while enforcing corrective measures.
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Compliance Failures Expose Gaps in Internal Controls
Investigations revealed that Coinone failed to properly verify approximately 70,000 user accounts. Moreover, authorities identified around 40,000 due diligence violations tied to incomplete or inconsistent customer data. These issues highlight significant gaps in onboarding and monitoring systems.
At the same time, regulators flagged roughly 30,000 cases where transaction restrictions were not enforced. These cases involved accounts that had not completed required verification steps. Consequently, such lapses increased exposure to potential financial crime risks.
Further scrutiny showed that Coinone processed nearly 10,000 transactions with 16 unregistered overseas exchanges. This activity violated local rules that require strict oversight of cross-border crypto dealings. Authorities view such transactions as a critical weakness in compliance frameworks.
Regulatory Pressure Expands Across Major Crypto Exchanges
Coinone acknowledged the regulator’s decision and stated it is reviewing the identified shortcomings. The exchange also confirmed it is implementing corrective actions to address compliance gaps. Meanwhile, its chief executive will receive an official reprimand as part of the enforcement process. The regulator has given Coinone 10 days to submit its response before finalizing the penalty. This step allows the exchange to present its position while preparing remediation plans.
The action follows a similar case involving Bithumb, which also faced sanctions over compliance failures. Consequently, regulators appear to be applying consistent standards across major platforms. South Korea’s latest enforcement action underscores a stricter regulatory approach toward crypto exchanges. Authorities are intensifying oversight as compliance failures continue to surface. The Coinone case highlights the risks of weak verification systems and cross-border transaction gaps. Going forward, exchanges operating in the region will likely face tighter scrutiny and higher expectations.
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