Korbit hit with nearly $2 million fine over widespread AML and KYC failures

The South Korean crypto exchange Korbit has accepted a fine of nearly $2 million. The exchange also has an official warning for widespread failures in its AML and customer verification systems.

In a statement, Korbit stated, “We respectfully and humbly accept the Financial Intelligence Unit’s decision to impose a fine. […] Despite the difficult circumstances, we have made this decision to ensure transparency and the healthy development of the crypto market.”

The fine shakes up Korbit’s market presence in South Korea

The Financial Intelligence Unit levied the penalties after finding that the company had broken many regulations for monitoring transactions. The FIU gave Korbit a warning along with the fine.

Responsibility was also placed on senior leadership, with the exchange’s CEO receiving a caution and the reporting officer receiving a reprimand.

According to the FIU, around 12,800 cases involved improper identity verification. These included accepting unclear or unverifiable ID documents, incomplete address information, and failures to carry out required re-verification. 

Another 9,100 cases involved users being permitted to trade before verification was fully completed, violating rules that restrict transactions by unverified customers.

Regulators also flagged 19 virtual asset transfers involving three overseas virtual asset service providers (VASPs) that were not properly reported. This was a breach of Korea’s rules regarding the handling of unregistered foreign entities.

Additionally, the FIU identified 655 cases where Korbit failed to conduct mandatory money laundering risk assessments before introducing new transaction types, including NFT-related services.

The fine is a major blow for Korbit, as the firm’s average daily trading volume has shrunk to just above the $12 million mark this year, representing a mere 0.5% of the South Korean market. This is below the country’s major exchange, Upbit, which consistently commands a market share of approximately 70% to over 80% of the total trading volume. 

At the same time, Korbit is preparing for a potential change in ownership. The exchange is currently majority owned by gaming giant Nexon through its holding firm NXC, with a subsidiary of SK holding about one-third of the shares.

Securities firm Mirae Asset is reportedly in talks to acquire Korbit. A local newspaper, Chosun Ilbo, reported a preliminary memorandum of understanding valued between $68 million and $95 million. However, final terms have not yet been confirmed.

South Korea’s anti-fraud efforts outweigh regulatory clarity, weakening the crypto sector

In their efforts to curb crypto fraud, the South Korean government has nearly $61.4 million worth of digital assets across several crypto trading platforms over the past 6 years, Cryptopolitan reported. This includes $37.4 million worth of crypto assets affected by Bithumb’s 2020 suspension of withdrawals. 

They also froze crypto assets worth $18.9 million across 30,106 cases between 2020 and September 2025. The regulator froze another $4.4 million worth of crypto, which was blocked on the Coinone exchange in connection with 755 cases. Nearly $296,000, involving 529 cases, was also frozen on Korbit, while a further $222,000, involving around 280 cases of non-compliance with the region.

Meanwhile, concerns are growing within the domestic virtual asset market as the release of guidelines allowing corporations to open bank accounts for crypto transactions has been delayed beyond its planned timeline.

“The delay in releasing the guidelines for corporate virtual asset accounts stems from the substantial workload involved in drafting the new legislation,” an FSC official said. “While we are reviewing the guidelines in parallel, our limited workforce means resources are concentrated on priority tasks, making it difficult to specify a clear timeline.”

On-chain data showed that the combined 24-hour trading volume of Korea’s five major won-based crypto exchanges, including Upbit, Bithumb, Coinone, Korbit, and Gopax, totaled $2.39 billion as of 1 p.m. Friday. This represented an about 82% drop from the $13 billion recorded on the same day a year earlier.

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