The Financial Supervisory Service is investigating the exchange after it accidentally sent 620,000 BTC to users during a promotion.
South Korea’s Financial Supervisory Service launched a comprehensive investigation into cryptocurrency exchange Bithumb on Tuesday after the platform erroneously sent approximately $43 billion worth of bitcoin to users last week. The financial watchdog decided to transform what was supposed to be a routine inspection into a large-scale investigation following the incident.
On February 6, the South Korean exchange accidentally distributed 620,000 BTC ($43.1 billion) across hundreds of user accounts as part of a promotional campaign. The error stemmed from a staff member who entered the reward unit as BTC instead of KRW (South Korean won). An FSS official told Yonhap that the agency is conducting the investigation with “utmost seriousness,” adding that authorities will take severe measures against any conduct that compromises market order.
Bithumb announced it has recovered 99.7% of the erroneously distributed bitcoin and 93% of the 1,788 BTC that users sold. Approximately 125 BTC remain beyond its reach. The exchange stated it will compensate affected users at 110% of their losses, as the incident caused a 15% crash in the bitcoin-South Korean won trading pair on its platform. At the time of the incident, Bithumb owned only about 46,000 BTC, despite having moved 620,000 BTC during the error.
The exchange also announced it will strengthen its internal control system and establish a 100 billion won ($68 million) user protection fund to assist users in case of unforeseen events.
The incident has had significant political repercussions. Parliamentarian Na Kyung-won of the People Power Party stated: “This is not a simple error. If an exchange operates simply by moving numbers on an internal ledger without real on-chain movements, it means they could sell bitcoin they don’t even own. This effectively sets the stage for a ‘bank run’ and total market collapse.” The ruling party has formally announced plans to impose a 15-20% limit on individual holdings in cryptocurrency exchanges, while financial authorities are discussing stricter measures to impose legal responsibilities on crypto exchanges comparable to those faced by traditional financial institutions.
