South Korea’s second-largest crypto exchange, Bithumb, has abruptly shut down its USDT market and ended an order-book-sharing agreement with Australia’s Stellar Exchange after only two months. The closure, which took effect at 11:00 AM on Friday and impacted 10 cryptocurrencies, appears to be a direct result of an extended regulatory investigation.
Key Points:
- Regulatory Investigation: The Korea Financial Intelligence Unit (FIU) began an on-site probe at Bithumb on October 1, 2025, specifically investigating if the order-book-sharing arrangement created loopholes in Anti-Money Laundering (AML) protocols.
- AML and Travel Rule Concerns: Regulators focused on weaknesses in Know Your Customer (KYC) and Travel Rule compliance, fearing the partnership with an overseas exchange could allow users to bypass South Korea’s strict cross-border transaction rules.
- Short-Lived Partnership: The USDT market beta launched on September 22, 2025, aimed to boost liquidity by sharing order books with Stellar Exchange (a subsidiary of Singapore-based BingX). The partnership quickly drew scrutiny, particularly after BingX staff were reportedly working at Bithumb’s Seoul headquarters.
- Compliance Challenges: Authorities are concerned that cross-border collaborations with foreign firms on Korean soil complicate the enforcement of strict domestic laws, such as the Act on the Protection of Virtual Asset Users.
- Impact on Users: All outstanding USDT market orders have been canceled, and related API services suspended. The 10 affected digital assets remain tradable against the Korean Won.
While Bithumb cited the need for “system improvements” and a “more stable” environment as the reason for the closure, industry observers widely interpret the move as a forced response to the FIU’s heightened concerns over AML controls. The case highlights the significant compliance challenges crypto exchanges face when expanding in jurisdictions with stringent regulatory oversight like South Korea.
