Korbit Exchange Indicted by South Korea’s FIU Over AML Violation

Key Notes

• South Korea’s FIU has completed a comprehensive inspection of Korbit.
• Findings have led the regulator to impose an institutional warning and a $1.88 million fine on the exchange.
• Bybit is allegedly in the process of acquiring Korbit.

South Korea’s Financial Intelligence Unit (FIU) has indicted the Korbit exchange after a recently conducted comprehensive inspection.

The result of this exercise showed that the cryptocurrency exchange violated the Specific Financial Information Act.

This includes failures in customer due diligence, transaction restrictions, and dealings with unreported overseas VASPs.

First-In, First-Out Method for South Korea’s Regulation

According to Wu Blockchain, an anti-money laundering (AML) inspection discovered that Korbit had fallen short of the Specific Financial Information Act.

It violated AML risk assessments for non-fungible tokens (NFTs). As a penalty for this offense, the FIU has imposed an institutional warning and a KRW 2.73 billion fine, which is equivalent to $1.88 million.

The CEO was also issued a caution, while the reporting officer was reprimanded. It is worth noting that Korbit has been under the radar of South Korean regulators for a while.

A month ago, the FIU was preparing major penalties for nearly every top crypto exchange after months of AML inspections.

Apart from Korbit, GOPAX, Bithumb, and Coinone were also on the list, based on a “first-in, first-out” method.

This means that the exchanges inspected earlier will be punished first. As a result, GOPAX should be next on the FIU’s agenda.

FIU stated on its website that it will issue prior notices of fines for violations of customer identification and transaction restriction obligations by the exchange.

Korbit will be allowed at least 10 days to submit its opinions. After that, the fine amount will be finalized based on the submitted responses.

FIU Comes up With Strategy for Inspections

Going forward, the FIU is looking to sequentially conduct follow-up measures for the other on-site inspections.

As a warning to other crypto firms, the regulator will strictly impose sanctions on serious violations of special financial laws. It has made it clear that it is not relenting in its efforts to strengthen operators’ AML capabilities.

As a way of supporting the virtual asset market to grow with public trust, the FIU will also strengthen the money laundering capabilities and legal compliance systems of firms.

Meanwhile, it is rumored that Bybit is considering the acquisition of Korbit. It has met with Korbit’s management and intends to start with a 31.5% stake, which belongs to SK Planet. Another 60.5% stake is owned by NXC, the parent company of Nexon.

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