The 26-year-old will still be eligible to compete in next year’s postponed Tokyo Olympics.
He also resigned as captain of Japan’s national swimming team, according to news agency reports, and has been requested to attend educational programs by the federation.
The Japan Swimming Federation did not respond to CNN’s requests for comment.
“I take this disposition seriously and apologize once again to all the people concerned and those who support me for causing trouble over my behavior,” said Seto.
“I have been asking myself how I can apologize to the people, but I think my apology is to continue to make efforts in swimming.
“I would like to seriously face swimming with determination to start over so that I can regain the trust of my family who have been deeply hurt by my irresponsible behavior and be recognized as a swimmer by both my family and everyone. I’m very sorry.”
Seto is the reigning world champion in the 400m and 200m individual medley events.
He has also agreed to sever sponsorship ties with All Nippon Airways, according to Reuters