The cryptocurrency sector in South Korea has been shaken by news of a major regulatory crackdown. On December 31, 2025, the Financial Intelligence Unit (FIU) fined South Korean cryptocurrency exchange Korbit 2.73 billion won ($1.9 million) for multiple violations of anti-money laundering (AML) regulations. This fine, accompanied by institutional warnings and disciplinary actions against senior compliance leadership, underscores the increasing scrutiny directed at crypto platforms.
Key Violations Highlighted by the FIU
The FIU conducted an on-site compliance inspection from October 16 to 29, 2024, under the Specific Financial Information Act, which outlines AML obligations for virtual asset service providers in South Korea. The investigation revealed approximately 22,000 violations related to customer due diligence (CDD) and transaction restrictions. Many accounts were reportedly opened or maintained without proper identity verification documents, exposing Korbit to potential misuse by unauthorized or illicit actors.
Another significant infraction involved the exchange’s approval of 655 new digital assets, including non-fungible tokens (NFTs), without conducting adequate risk assessments. Regulatory authorities also flagged concerns over 19 asset transfer transactions with three overseas virtual asset service providers that failed to meet South Korean reporting or registration standards. This lack of compliance raised alarms about the transparency and accountability of cross-border cryptocurrency transactions.
The Need for Stronger Compliance in Crypto Exchanges
As South Korea’s cryptocurrency ecosystem expands, the need for robust AML controls cannot be overstated. The FIU has sent a clear message by issuing a formal warning to Korbit’s CEO and reprimanding its AML officer. These penalties highlight the importance of leadership accountability in preventing systemic failures.
According to regulatory experts, virtual asset service providers must strengthen their Know Your Customer (KYC) processes and systematically assess risk when onboarding new digital assets. This approach ensures compliance with national and international standards, which is especially critical as South Korea positions itself as a global cryptocurrency hub.
Earlier in 2025, Dunamu’s cryptocurrency exchange Upbit faced similar penalties for verification lapses. These back-to-back actions create a clear regulatory trajectory: South Korean authorities are no longer tolerating negligence in compliance practices.
How You Can Stay Ahead of Regulations?
Compliance professionals and crypto investors should prioritize platforms that demonstrate a proactive commitment to regulatory adherence. Platforms like Coinbase provide resources and monitoring tools to help both investors and exchanges align with stringent standards. Consider exploring Coinbase’s robust compliance framework, which ensures state-of-the-art transaction monitoring and due diligence support.
The Road Ahead
South Korea’s regulatory focus reflects a broader trend across global cryptocurrency markets, where transparency is becoming a non-negotiable requirement. Exchanges must recognize the critical role of compliance in securing long-term trust and sustainability. As the cryptocurrency landscape continues to evolve, tighter rules and enforcement will likely shape the next phase of industry development, ensuring safer transactions for all participants.
