South Korean regulators have launched an investigation into crypto exchange Bithumb following a major technical error that mistakenly credited users with approximately $43 billion worth of Bitcoin. The incident, which involved an internal ledger mistake distributing Bitcoin instead of small cash rewards, triggered a sell-off that crashed Bitcoin’s price on the platform. Officials stated the event exposed serious structural weaknesses, prompting plans for stricter oversight and potential new legislation for digital asset firms.
South Korean regulators are investigating Bithumb after the exchange erroneously credited users with about $43 billion in Bitcoin. The Financial Supervisory Service head said the error “laid bare the structural problems of virtual asset exchanges’ ledger systems.”
The regulator plans to strengthen supervision by introducing punitive fines for IT incidents and reinforcing security responsibilities for executives. New measures will include requirements for self-managing IT asset inventories and on-site inspections for companies failing to address critical vulnerabilities.
The error occurred when hundreds of customers received up to 2,000 BTC each instead of a $1.37 cash reward. This internal ledger mistake led to a massive sell-off of paper Bitcoin, temporarily depressing the token’s listed price on Bithumb to as low as $55,000.
On Sunday, Bithumb CEO Lee Jae-won announced a compensation plan for impacted users. The plan includes cash payments for affected traders and a week of zero trading fees for all customers.
The CEO said 99.7% of the overpaid Bitcoin had been recovered. The remaining 0.3%, worth approximately $123 million, was repaid using company assets.
A spokesperson for Korea’s ruling Democratic Party said the incident “clearly exposes structural vulnerabilities” in crypto exchange operations. They called for establishing real-time verification systems and multi-verification procedures.
Industry adviser Sean Lee said such incidents will increase caution as regulators work on digital asset legislation. “Policymakers often don’t have economic-based KPI’s. Their measurement is more on preventing things from going wrong,” Lee stated.
