South Korean lawmakers are ramping up strain on monetary regulators after a system failure at Bithumb, the nation’s largest cryptocurrency change, led to the unintentional distribution of greater than $43 billion value of Bitcoin (BTC) earlier this month.
The February 6 incident has triggered political scrutiny of each the change itself and the companies liable for overseeing the digital asset market.
Behind The Bithumb Huge Bitcoin Mishap
According to native reporting by The Korea Instances, members of the Nationwide Meeting are questioning how such an enormous error might slip by way of regardless of repeated regulatory inspections.
Rep. Kang Min-guk of the primary opposition Folks Energy Occasion disclosed that the nation’s Monetary Companies Fee (FSC) reviewed Bithumb 3 times between 2022 and 2025.
Over the identical interval, the Monetary Supervisory Service (FSS) performed three separate inspections. But regulators did not detect what has now been described as a crucial structural weak point within the exchange’s system.
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Kang argued that present oversight mechanisms had been insufficient. He identified that safeguards had been inadequate to forestall a state of affairs through which a single worker might provoke huge coin transfers. Kang stated:
The episode shouldn’t be merely a technical mishap however a case that lays naked deeper structural weaknesses within the digital asset market, together with complacent supervision and gaps in regulation.
As an alternative of crediting customers with Bitcoin value 2,000 received — roughly $1.38 — the system mistakenly credited 2,000 Bitcoin per person. In whole, 620,000 Bitcoin had been incorrectly distributed.
Rep. Han Chang-min of the minor Social Democratic Occasion additionally criticized regulators, questioning whether or not supervisory authorities had meaningfully evaluated the change’s inner methods. “Authorities seemed to be shifting duty onto Bithumb regardless of their supervisory function,” Han stated.
Broader Crypto Oversight
In response to the incident, the FSS prolonged the deadline for its formal investigation from Feb. 13 to the top of the month, citing the necessity for added time.
An eight-member inspection staff is now intensifying its assessment, specializing in attainable violations associated to investor safety and anti-money laundering (AML) compliance.
Explicit consideration is being given to the system structure that allowed cash not truly held by the change to be credited to customers. Regulators haven’t dominated out the likelihood that additional faulty distributions may very well be uncovered.
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Individually, monetary authorities have reportedly shaped an emergency response staff in coordination with the Digital Asset eXchange Alliance (DAXA), a self-regulatory physique representing domestic exchanges.
The staff has begun inspections of asset verification and inner management methods at 4 different platforms — Upbit, Coinone, Korbit, and GOPAX. Any deficiencies are anticipated to be integrated into DAXA’s self-regulatory pointers and will affect the subsequent section of cryptocurrency laws in South Korea.
On the time of writing, Bitcoin was buying and selling at $67,763, marking a 2% decline over the previous seven days and exhibiting minimal change since Thursday’s buying and selling session.
Featured picture from OpenArt, chart from TradingView.com
