South Korean regulators have launched a full probe into cryptocurrency exchange Bithumb and the broader industry after the platform mistakenly distributed over $40 billion in Bitcoin to customers. The error occurred during a reward program intended to distribute only $423. Regulators stated the findings will inform upcoming legislation.
South Korea has initiated a comprehensive investigation into Bithumb following an incident where the exchange erroneously sent 620,000 Bitcoin to customers. According to regulatory filings, the exchange held only about 46,000 BTC prior to the event.
The Financial Supervisory Service (FSS) has begun on-site inspections and will pursue formal investigations if legal violations are found. FSS Governor Lee Chan-jin stated the core issue was that erroneously entered data resulted in an executed transaction.
“It was nothing more than erroneously entered virtual data, yet it ended up being traded. That is the essence of the issue. The transaction was actually executed,” Governor Lee said. The exchange intended to send rewards totaling $423 but instead distributed Bitcoin worth over $40 billion.
Bithumb has apologized and promised to enhance its internal controls. The exchange reported recovering over 90% of the mistakenly sent funds from users who cashed out.
“We have reported it to all relevant authorities and are fully cooperating with the ongoing Financial Supervisory Service inspection. We will use systems and processes to prevent human error from becoming an accident,” the exchange stated. Governor Lee emphasized the findings are critical for integrating the virtual asset market into the regulatory system.
Data from CryptoQuant shows the incident triggered significant customer withdrawals. Over 4,100 BTC left the exchange on the day of the error, causing reserves to drop by 10%.
Outflows have since subsided to below 500 BTC daily. Regulators confirmed the probe’s findings will directly impact the second phase of legislation for the cryptocurrency sector.
