FIU fines Coinone 5.2bn won, orders 3-month partial suspension

South Korea’s Financial Intelligence Unit fined Coinone 5.2 billion won ($3.49 million) and imposed a three-month partial business suspension starting April 29 following an on-site inspection conducted in April and May 2025. The FIU found the exchange handled 10,113 unreported overseas virtual asset transfers and recorded roughly 70,000 customer verification lapses.

The FIU found the unreported transfers involved 16 overseas operators that were neither registered nor reported under the Specific Financial Information Act. The customer verification failures included about 40,000 instances of improper identity checks and about 30,000 cases where transactions were not blocked for unverified users. The agency issued an official reprimand to Coinone CEO Cha Myung-hoon.

Under the three-month partial suspension, new customers will be prohibited from depositing or withdrawing virtual assets. Existing customers can continue trading and use Korean won services normally.

Coinone acknowledged the FIU decision and said it is pursuing improvements to address the identified deficiencies. The exchange has not yet decided whether to file an administrative lawsuit and will review the matter through its board of directors.

The sanction follows broader regulatory enforcement in the sector. In March, rival exchange Bithumb received a six-month partial suspension for anti-money-laundering breaches. In January, the National Assembly amended AML laws to extend background checks to major shareholders of exchanges.

Separately, the Financial Supervisory Service opened a targeted probe into unfair trading using automated trading programs and application programming interfaces. The FSS estimates APIs account for about 30% of transaction volume in the Korean virtual asset market.

The FSS described manipulation tactics tied to APIs, including “painting the tape,” where repeated small buy-and-sell orders create false volume before larger manual purchases lift prices, and automated high-priced buys that push assets to preset targets so operators can sell at higher levels. The regulator also warned about spoofing, where large fake orders are posted and quickly canceled to mislead other traders.

The FSS advised retail investors to be cautious of coins that show sudden, short-lived spikes in volume or price without news and discouraged sharing “high-frequency single-share sales codes” on social media. “If an excessive repeated sales account is confirmed, we will promptly conduct a planned investigation and take strict measures,” the FSS warned.

Regulatory actions target reporting obligations, customer verification and the use of automated trading tools in the virtual asset market.