Seoul, April 13, 2026 | South Korea's Korea Financial Intelligence Unit (KoFIU) fined cryptocurrency exchange Coinone approximately ₩5.2 billion (about $3.49 million USD) on Monday and imposed a three-month partial business suspension after finding the exchange failed to verify customer identities in roughly 70,000 cases and processed transactions through unregistered overseas virtual asset service providers (VASPs). The action is the fourth in a sequential series of penalties KoFIU has issued against South Korea's five largest registered exchanges following on-site inspections conducted throughout 2024 and 2025.

The suspension applies only to new users and restricts their ability to transfer virtual assets to or from external wallets. Existing Coinone users retain full access to trading and withdrawals, a structure that mirrors the partial suspension imposed on Bithumb in March 2026. Analysts suggest that design was intended to penalize the exchange without triggering broader retail market disruption.

Coinone received advance notice of the potential sanctions in late March or early April 2026. At that time, a company spokesperson said the penalty amount had not yet been finalized and that Coinone was "actively presenting its case." The regulator proceeded with the final ruling on April 13. KoFIU, which sits under the Financial Services Commission, issued the penalty under the Act on Reporting and Using Specified Financial Transaction Information, South Korea's primary anti-money laundering law for VASPs.

A Smaller Fine, but the Same Charges

Coinone's ₩5.2 billion penalty looks modest against the fines levied on its larger competitors. Upbit operator Dunamu was fined ₩35.2 billion (roughly $24.5 million) with a three-month partial suspension, while Bithumb received a ₩36.8 billion fine (about $24.6 million) and a six-month partial suspension. Korbit received a fine of ₩2.73 billion and an institutional warning.

The size difference largely reflects the volume of violations: Coinone's approximately 70,000 unverified identity cases compares with 6.65 million at Bithumb and 8.6 million at Upbit.

The second charge, involving transactions processed through unregistered overseas counterparties, is structurally identical to a violation KoFIU flagged against Bithumb. In that case, regulators identified 45,772 cross-border transfers linked to 18 unregistered foreign VASPs.

South Korean law requires all VASPs operating in or interacting with the Korean market to maintain formal registration. Routing volume through unregistered intermediaries, regardless of the technical method, is treated as a direct compliance breach.

Coinone, founded in 2014 with backing from Kakao Ventures and recently restructured under a sole-CEO governance model, is South Korea's third-largest exchange by market share, though it trails its two dominant peers by a wide margin. Upbit controls roughly 71.6% of domestic trading volume and Bithumb approximately 25%, leaving Coinone in a distant third position. The exchange briefly captured around 20% market share in March 2025 during a zero-fee promotional event before falling back to approximately 1.8% by October 2025. Daily average trading volume across the Korean market now runs near $3.7 billion, down about 15% from the prior half-year, according to Tiger Research data.

South Korea's regulatory framework for VASPs rests on two pillars. The Act on Reporting and Using Specified Financial Transaction Information underpins the current enforcement sweep. The second pillar, the Virtual Asset User Protection Act, took effect on July 19, 2024, and governs cold wallet custody mandates, market manipulation prohibitions, and real-time suspicious transaction monitoring requirements.

A Systematic Sweep, With One Exchange Still Pending

KoFIU worked through South Korea's five largest exchanges in inspection order. GOPAX, operated by Streami Inc., has not yet received its final ruling and remains the only exchange in the cohort still awaiting a decision. Analysts tracking the enforcement wave had projected cumulative industry fines could exceed ₩150 billion (roughly $110 million USD) before the cycle closes.

The Upbit penalty introduces a legal variable worth watching. Dunamu has appealed its ₩35.2 billion fine, and that appeal has temporarily halted enforcement of the penalty. If Dunamu succeeds, the outcome could provide grounds for Coinone and other penalized exchanges to contest their own rulings.

What This Means Outside South Korea

South Korea's verified crypto user base reached 11.13 million, an all-time high, in the second half of 2025, though growth slowed sharply from 24.7% year-over-year in the second half of 2024 to just 5.2% in the second half of 2025.

Despite the compliance pressure, the government has continued to delay implementation of a capital gains tax on crypto, preserving trading incentives for retail participants. The tax has been postponed repeatedly, having originally been slated for implementation in 2025, giving retail investors continued relief even as institutional compliance demands intensify.

The enforcement model is drawing close attention across Asia. Compliance analysts describe 2026 as the point at which APAC regulators shifted from building frameworks to actively imposing penalties. The unregistered overseas VASP charge is particularly relevant for exchanges and developers operating cross-border volume flows through markets such as India, Nigeria, South Africa, and Indonesia, where informal stablecoin corridors and P2P networks sometimes connect to Korean retail liquidity without formal registration.

For technically oriented operators, South Korea's Travel Rule threshold of KRW 1 million (approximately $800 USD) is among the lowest in Asia and constitutes a hard compliance requirement for DeFi protocols and cross-border bridging tools interacting with Korean retail flows.

Looking further ahead, South Korea's second-stage Digital Asset Basic Act covers stablecoin regulation, expanded FSC investigative powers, and foreign operator oversight. That legislation missed a December 2025 deadline and has been pushed into 2026, leaving a key piece of the regulatory roadmap still unresolved and widening the potential scope of future enforcement actions.

GOPAX's pending ruling will close out the current inspection cycle. Whether any of the penalized exchanges succeed in challenging their fines through the courts will shape how South Korea's compliance enforcement is interpreted, and tested, across the region in the months ahead.