Bithumb Shuts Down USDT Market Amid Regulatory Scrutiny

Bithumb, South Korea's second-largest cryptocurrency exchange, has closed its USDT market in response to regulatory scrutiny over anti-money laundering controls.

The closure followed a two-month partnership with Stellar Exchange, which involved sharing order books across 10 cryptocurrencies. The partnership aimed to increase liquidity through pooled trading volume and provide users with deeper market access.

Regulators from the Korea Financial Intelligence Unit (FIU) launched an on-site investigation at Bithumb in October, examining whether the exchange's order-book sharing arrangement created vulnerabilities in anti-money laundering protocols. Investigators focused on potential weaknesses in Know Your Customer procedures and Travel Rule compliance, particularly regarding partnerships with overseas exchanges that may not meet South Korean regulatory standards.

The shutdown demonstrates the operational risks exchanges face when expanding internationally in jurisdictions with rigorous oversight frameworks that prioritize investor protection and crime prevention.