Korbit, one of South Korea’s oldest cryptocurrency exchanges launched in 2013, faced penalties following an FIU inspection from October 16 to 29, 2024. Regulators uncovered approximately 22,000 breaches of the Specific Financial Information Act, including failures in customer due diligence and transaction monitoring. Key issues involved accepting blurred or incomplete identity documents, permitting trades before full Know Your Customer (KYC) verification, and inadequate address record verification.
The FIU imposed an institutional fine of KRW 2.73 billion, equivalent to about $1.9-2 million, alongside a formal warning to the exchange. Korbit’s CEO received a caution, while the compliance officer faced a reprimand after a disciplinary committee meeting in December 2025. The exchange confirmed it has implemented all corrective actions outlined in the post-inspection report.
Specific Violations Detailed
Investigators identified multiple compliance gaps during the on-site review. Korbit processed 19 virtual asset transfers involving three unregistered overseas virtual asset service providers (VASPs), violating prohibitions on dealings with unreported foreign entities. South Korean law requires prior registration for such international transactions to mitigate money laundering risks.
Additionally, the exchange committed 655 violations related to risk assessments for non-fungible token (NFT) transactions. Korbit failed to conduct mandatory money laundering risk evaluations before offering or supporting these services, breaching FIU protocols for new product introductions. Routine KYC lapses amplified concerns, as incomplete verifications enabled potentially suspicious activities to proceed unchecked.
These findings reflect broader deficiencies in Korbit’s automated monitoring systems and manual oversight processes. The FIU emphasized that such shortcomings heighten vulnerability to financial crimes, including illicit fund flows through digital assets.
Korbit’s Response and Statements
In a public statement, Korbit announced it “respect[s] and humbly accept[s] the Financial Intelligence Unit’s decision to impose a fine.” The exchange cited a commitment to market transparency amid challenges, opting against an appeal to support the “healthy evolution of the crypto market.” Korbit affirmed completion of all recommended rectifications and pledged to “lead in safeguarding users through increasingly rigorous checks.”
This acceptance came after the FIU’s December 2025 disciplinary review, avoiding prolonged legal contention. Industry observers note the move aligns with Korbit’s strategy to rebuild trust, especially as its market position weakens.
Regulatory Context in South Korea
South Korea maintains some of the world’s strictest cryptocurrency regulations, enforced via the Specific Financial Information Act and FIU oversight. Virtual asset service providers must register, implement robust AML/KYC frameworks, and report suspicious activities promptly. Recent 2025 updates mandated stricter compliance for public companies and professional investors, with banks enforcing enhanced KYC.
The FIU has ramped up inspections, targeting exchanges like Upbit alongside Korbit. This case exemplifies enforcement against cross-border risks and emerging assets like NFTs. Globally, similar pressures from FATF standards drive such actions, with crypto platforms facing fines exceeding hundreds of millions elsewhere.
Korbit’s Business Challenges
Once a market leader in Bitcoin-won trading, Korbit’s average daily volume has shrunk to $12 million in 2025, capturing just 0.5% of South Korea’s crypto market. Competitors like Upbit dominate with over 64% share and volumes surpassing $700 million daily. The fine exacerbates financial strain for the exchange, now fourth-largest domestically.
Ownership shifts loom large: Mirae Asset Group is negotiating acquisition for $68-100 million (KRW 100-140 billion). Shareholders NXC (Nexon’s holding firm, 60.5% stake) and SK Square (31.5%) signed an MOU with Mirae Asset Consulting in late 2025. No closing date is confirmed, but the deal could inject stability amid regulatory woes.
Broader Industry Implications
Korbit’s compliance underscores escalating AML demands on crypto exchanges worldwide. In Asia, regulators prioritize VASP registration and risk-based monitoring to curb laundering via digital assets. This penalty serves as a cautionary tale, potentially accelerating consolidations as smaller platforms struggle.