South Korean Court Lifts Bithumb's Six-Month Business Suspension

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In brief - The Seoul Administrative Court granted a stay on Bithumb's business suspension Thursday, pending a final ruling. - Judge Gong Hyeon-jin cited potential irreparable harm to the exchange if core functions remained restricted. - The suspension was part of March sanctions by South Korea's Financial Intelligence Unit. A Seoul court granted crypto exchange Bithumb an emergency injunction Thursday, according to reports in local media—blocking enforcement of a six-month partial business suspension that would have restricted the cryptocurrency exchange's core operations. South Korea's Financial Intelligence Unit imposed the sanctions in March after alleging 6.65 million violations of local anti-money laundering rules. The FIU cited 3.55 million failures to verify customer identities and 3.04 million cases where Bithumb failed to block restricted transactions, according to the same filing. Alongside the suspension—considered the most severe penalty ever imposed on a Korean won-based exchange—regulators levied a $24.6 million (36.8 billion won) fine, with CEO Lee Jae-won also facing disciplinary action. Judge Gong Hyeon-jin's Thursday ruling emphasized the business impact of restricting Bithumb's operations. "While trading within the exchange and Korean won conversions remain possible, inter-exchange transactions and external virtual asset transfers are also core functions," the court stated, adding that, "Restrictions on these alone are expected to cause difficulties in attracting new customers." The court also considered upcoming regulatory changes that could affect Bithumb's competitive position, noting that "listed corporations and registered professional investment corporations” will be able to participate in the virtual asset market “soon.” The court noted that, if sanctions were to remain in effect, “it will inevitably have a negative impact on Bithumb’s ability to secure these new clients." Bithumb said it plans to “faithfully present” its position throughout the remaining legal proceedings. The exchange had requested the court end both the suspension and fine on March 23, just days before the penalties were set to take effect March 27. Founded in 2014, Bithumb ranks among South Korea's largest cryptocurrency exchanges. The platform has operated under the oversight of the Financial Intelligence Unit, the anti-money laundering body under South Korea's Financial Services Commission. Bithumb’s court victory comes as it faces intensifying regulatory scrutiny, following an incident in February when the exchange mistakenly credited hundreds of users with 2,000 BTC instead of 2,000 won in a promotion. Following the $43 billion blunder, South Korean lawmakers criticized regulators over missing the structural issues that led to Bithumb’s accounting error. The exchange later filed to seize Bitcoin from users who refused to return mistakenly credited funds. South Korean authorities have also halted crypto lending services industry-wide, citing leverage concerns.

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