Ruling keeps Bithumb operating while broader legal challenges to crypto sanctions gather pace
A Seoul court ruled Thursday in favor of Bithumb, temporarily halting a six-month partial business suspension imposed by regulators, allowing the crypto exchange to continue operations pending a final ruling.
The Seoul Administrative Court said it accepted Bithumb's request to suspend the partial business suspension imposed by the Financial Intelligence Unit, an anti-money laundering body under the Financial Services Commission.
"We plan to faithfully present our position throughout the remaining legal proceedings," Bithumb said.
The FIU imposed the suspension and a fine of 36.8 billion won in March, citing the company's failure to comply with its obligations to verify the identities of its users in about 6.65 million cases. The violations included failure to block transactions with unregistered virtual asset operators, comply with customer verification requirements and enforce transaction restrictions.
The partial suspension would have halted the transfer of external virtual assets for new customers, in what would be the harshest sanction ever imposed on a Korean won-based cryptocurrency exchange.
The measure was originally set to take effect on March 27, but Bithumb filed an administrative lawsuit and sought an injunction on March 23, keeping the sanctions on hold until Thursday's ruling.
Since early last year, the FIU imposed heavy penalties on the nation's largest won-based crypto exchanges, including Upbit operator Dunamu, Bithumb, Coinone and Korbit, for violating the Special Financial Transactions Act. All except for Korbit have filed administrative lawsuits to overturn these sanctions, raising broader questions over the FIU's sanction framework.
At a hearing on April 23, Bithumb said the suspension would block new customer inflows and hurt its business, with the impact potentially growing if the institutional investor market opens. The FIU countered that the measure affects only part of trading activities and would have a limited impact on revenue.
Bithumb is also expected to challenge the fine. The FIU offered a 20 percent reduction for payment within the deadline, but the exchange has yet to pay more than four weeks after it passed.
The ruling had been widely anticipated, citing a similar case involving Dunamu. Dunamu won a first-instance administrative ruling on April 9, with the court saying operators' self-initiated compliance efforts should be considered in the absence of clear regulatory guidelines. The FIU has appealed.
Coinone was fined 5.2 billion won and given a partial suspension for Know Your Customer violations. It is currently under a temporary stay, with its first hearing scheduled for May 12.
The FIU said sanction levels differed depending on how effectively exchanges blocked transactions with unregistered operators. The ruling is likely to raise further questions over the legal basis of the FIU's sanctions approach.
ch0221@heraldcorp.com
