This Week's First Round of the Bithumb vs. FIU Battle: "First, Suspend the Enforcement" [Crypto Briefing]

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[Financial News] This week, Bithumb and the Financial Intelligence Unit (FIU) under the Financial Services Commission will face off in court for the first time. The two sides are expected to engage in a fierce legal battle over whether to suspend the partial business suspension imposed on Bithumb by the FIU. Legal experts say the chances of a stay being granted appear relatively high, citing the earlier Dunamu case.
According to the crypto industry and legal circles on the 20th, Division 2 of the Seoul Administrative Court, presided over by Judge Gong Hyun-jin, will hold the first hearing on the 23rd at 10 a.m. for Bithumb's request to suspend the FIU's partial business suspension order.
On the 16th of last month, the FIU imposed a heavy sanction, including a six-month partial business suspension and a fine of 36.8 billion won, saying Bithumb had violated the Act on Reporting and Using Specified Financial Transaction Information 6.65 million times, including obligations to refrain from transactions with unreported virtual asset businesses, customer verification (KYC), and transaction restrictions.
In response, Bithumb appointed Bae, Kim & Lee LLC (BKL) as its legal representative and on the 23rd of last month filed both a lawsuit seeking to overturn the six-month partial business suspension and a request to suspend enforcement with the Seoul Administrative Court. The hearing on the 23rd will concern the stay request. No hearing date has yet been set for the main cancellation lawsuit.
If the stay is granted, the effect of the FIU's partial business suspension will be temporarily halted until the main cancellation suit is finalized. If it is not granted, the suspension will take effect from the 30th, regardless of the outcome of the cancellation suit. The court had previously suspended the effect of the FIU's order on an interim basis until the 30th.
Legal circles are leaning more strongly toward the possibility of a stay. In cases involving the suspension of administrative sanctions, the key question is whether failing to stop the order now would cause 'irreparable harm.' If the stay is not granted this time, any damage from the business suspension would be impossible to recover later, even if Bithumb ultimately prevails in the main lawsuit.
Dunamu Inc., which was sanctioned by the FIU for similar reasons, also won approval for a stay in March last year. At the time, the court suspended the effect of the partial business suspension order until 30 days after the main ruling was issued.
One lawyer specializing in administrative litigation explained, "A stay in an administrative lawsuit is a procedure designed to prevent 'irreversible harm' caused by the effect of an administrative order," adding, "The court considers not only financial losses but also intangible damage such as harm to a company's credibility."
Some observers believe that on the day of the hearing, the court will not only examine the validity of the stay request, but also hear legal arguments over the underlying sanction that will be addressed in the main case. Dunamu also argued at the stay hearing stage, before the main trial, that the sanction itself was unjustified.
In that case, Bithumb is expected to build its argument by referring to Dunamu's victory. On the 9th, the court ruled in Dunamu's favor, saying that "the plaintiff's intent or gross negligence has not been established."
The bench said, "Even in a situation where the regulator did not provide any guidance on the specific measures Dunamu was required to take, it can be recognized that Dunamu took its own measures," and added, "The fact that Dunamu's measures were found insufficient after the fact does not mean it failed to take the necessary steps with intent or gross negligence."
Attorney Kim Byung-kook of Beonhwa Law Firm said, "Bithumb is likely to argue in the main lawsuit that it faithfully implemented its internal security systems, KYC, and anti-money laundering (AML) measures even though there were no clear regulations at the time," adding, "The FIU is likely to counter by questioning the effectiveness of those measures while also citing cases in which authorities or the Digital Asset eXchange Association (DAXA) issued compliance recommendations despite the regulatory vacuum, in order to argue that there was intent or gross negligence."
yimsh0214@fnnews.com Lim Sang-hyeok Reporter