Key Takeaways:

• Coinone has been fined about $3.5 million and barred from accepting new user deposits for three months due to rule violations.
• Regulators found 70,000 identity check failures and dealings with unapproved crypto exchanges.
• South Korea is enforcing stricter rules for crypto platforms, similar to traditional banks.

South Korea’s financial watchdog has fined Coinone, the country’s third-largest cryptocurrency exchange by trading volume, 5.2 billion Korean won (about $3.5 million). It has also imposed a three-month partial suspension on certain business operations, running from 29 April 2026 to 28 July 2026.

The penalty was issued by the Financial Intelligence Unit (FIU), which operates under the Financial Services Commission (FSC), South Korea’s main financial regulator. The FIU confirmed the action on 13 April 2026, following an on-site inspection that uncovered serious gaps in Coinone’s compliance systems.

A pattern of identity verification failures

The FIU found that Coinone failed to properly verify users’ identities in around 70,000 cases. Around 40,000 of those had incomplete or unverifiable identity documents, while roughly 30,000 users were allowed to trade without completing full identity checks.

In South Korea, crypto exchanges are legally required to verify user identities through real-name bank accounts. This rule is designed to prevent money laundering, which is the process of making illegal funds appear legitimate.

The investigation also found that Coinone processed over 10,000 transactions through 16 overseas crypto exchanges not approved by South Korean regulators. This violated the country’s Act on Reporting and Using Specified Financial Transaction Information, also known as the Special Financial Information Act. Regulators said the platform continued these transactions despite repeated warnings.

Internal monitoring was also found lacking. Some users reportedly moved large sums without proper checks on their income or background. In addition, users’ risk profiles — which help flag suspicious activity — were not updated even when their trading behavior changed.

Learn More: What is a Public Address?

What the sanctions mean for Coinone

Starting April 29, new users will not be able to make deposits, withdrawals, or crypto transfers to external wallets until the suspension ends on 28 July 2026. Existing users, however, can continue trading and accessing their funds as usual.

Coinone CEO Cha Myung-hoon received an official reprimand, which is an administrative penalty rather than a criminal charge. The exchange has 10 days to formally respond before the fine is finalized.

In its response, Coinone said it accepts the regulator’s findings and is working to fix the identified compliance gaps. The company’s board is also reviewing whether to file an administrative lawsuit to challenge the penalties.

Related: South Korea Orders Crypto Exchanges to Check User Funds Every 5 Minutes

Part of a broader regulatory push

The action against Coinone is the second major enforcement move by South Korea’s FIU in a matter of weeks.

On 16 March 2026, Bithumb, the country’s second-largest crypto exchange, was fined about 36.8 billion won (about $24.5 million) and handed a six-month partial suspension for similar Anti-Money Laundering (AML) failures.

Earlier, in February 2025, Dunamu, the operator of Upbit crypto exchange, received a similar three-month suspension. However, the Seoul Administrative Court overturned that decision on 9 April 2026, stating that the regulatory standards used were not clearly defined.

These actions show that South Korea’s FIU is enforcing the same rules for crypto platforms as it does for traditional banks. They also indicate that regulatory reviews of major exchanges in the country are still ongoing.