Coinone hit with $3.5M fine and service ban

South Korea’s anti-money laundering watchdog has moved to fine crypto exchange Coinone 5.2 billion won, about $3.49 million, and impose a three-month partial business suspension after finding failures in customer verification and dealings with unregistered overseas platforms.

The case matters because it shows Seoul is still putting pressure on local exchanges through compliance enforcement, not just new rule-making. The penalty also falls on one of the country’s established trading venues, giving the action more weight than a routine warning.

The penalty focuses on onboarding and foreign flows

The Financial Intelligence Unit said Coinone failed to verify user identities properly in about 70,000 cases. It also said the exchange supported around 10,000 transactions with 16 unregistered overseas exchanges, a combination that pushed the regulator toward one of the toughest sanctions seen against a domestic crypto platform.

The partial suspension would stop new customers from depositing or withdrawing funds for crypto trading for the three months. That limits the damage to part of the business rather than shutting the exchange entirely, but it still hits new user growth at a time when compliance has become central to exchange competition in South Korea.

The regulator is zeroing in on core AML controls

South Korean exchanges are required to verify customer identities through real-name accounts linked to domestic banking partners and to report transactions above a set threshold. The regulator’s case against Coinone suggests it sees the issue not as a minor lapse, but as a failure in basic anti-money laundering controls.

The FIU also said Coinone’s chief executive will receive an official reprimand. The exchange will have 10 days to submit its response before the fine is finalised, which means the process is not fully finished, but the regulator’s position is already clear.

The warning goes beyond one exchange

For the broader market, the message is simple. Seoul is not only focused on market growth, token listings, or trading disruptions. It is still digging into onboarding checks, transaction monitoring, and cross-border exposure, especially where offshore counterparties sit outside Korea’s registration system.

For Coinone, the immediate problem is operational as well as financial. A multimillion-dollar fine hurts, but a pause on new-customer deposits and withdrawals can also slow momentum in a market where user growth and banking compliance are closely tied.