Coinone Hit With $3.5M Fine After 70,000 KYC Failures Surface

South Korea’s FIU fines Coinone 5.2B won and suspends part of its operations for failing AML obligations in 70,000 cases.

South Korea’s Financial Intelligence Unit has come down hard on crypto exchange Coinone. 

The agency announced Monday it would fine the platform 5.2 billion won, equivalent to roughly $3.49 million. The penalty follows an on-site inspection that uncovered serious violations of anti-money laundering obligations. 

Coinone also faces a three-month partial business suspension. The FIU operates under the Financial Services Commission.

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Coinone Fined for KYC Failures and Unregistered Exchange Transactions

The FIU’s inspection revealed two major problem areas. 

First, Coinone failed to verify customer identities in approximately 70,000 cases. South Korean law requires exchanges to confirm user identities through real-name accounts tied to local banking partners.

Second, the agency found Coinone processed nearly 10,000 transactions with 16 unregistered overseas exchanges. 

This directly violated the Act on Reporting and Use of Specific Financial Information, commonly known as the Special Financial Information Act.

The violations were significant enough to warrant both financial penalties and operational restrictions. 

Regulators also issued a formal reprimand warning to Coinone CEO Cha Myung-hoon. The FIU gave Coinone 10 days to submit its position before the fine becomes official.

What the Partial Business Suspension Means for Coinone Users

The suspension period runs from April 29 to July 28. 

During this time, new customers cannot deposit or withdraw funds for crypto trading. However, existing customers can continue trading normally on the platform.

The restriction specifically targets external virtual asset transfers for new users. This limits Coinone’s ability to onboard fresh capital during that period. It is a targeted measure rather than a full shutdown.

Yonhap reported that the decision reflects the scale and nature of what the FIU uncovered. 

Regulators appear focused on curbing gaps in compliance without completely halting the exchange’s operations. The partial nature of the suspension signals a measured but firm response.

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Coinone Weighs Legal Action Against Financial Authorities

Coinone has acknowledged its shortcomings following the announcement. 

The exchange said it would carefully review the possibility of legal action against financial authorities. This raises questions about whether the platform will pursue litigation, similar to what Dunamu and Bithumb did before it.

According to Edaily, Coinone has not confirmed any final decision on the legal route. The 10-day window to submit an opinion gives the exchange time to consider its options. Observers are watching closely to see if a legal challenge follows.

This case adds to growing regulatory pressure on crypto exchanges in South Korea. Authorities continue to tighten AML enforcement across the sector. 

Coinone now joins a list of platforms facing consequences for compliance failures.

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