South Korean lawmakers are intensifying pressure on financial regulators following a major error by crypto exchange Bithumb. The exchange mistakenly credited customers with Bitcoin it did not hold, sparking market concerns and reigniting questions about oversight in the nation's digital asset sector.
Lawmakers assert the Financial Services Commission (FSC) overlooked critical flaws in Bithumb's systems despite multiple inspections. The incident is seen by some as highlighting structural weaknesses and regulatory gaps within the crypto market.
During a promotional event, Bithumb erroneously distributed 2,000 Bitcoin per user instead of the intended 2,000 Korean won. This resulted in a theoretical distribution of 620,000 BTC that the exchange did not possess.
Criticism of the FSC grew as its investigation into Bithumb was delayed. While the regulator vowed "stern legal actions," the probe, initially set to conclude mid-February, has been extended.
Bithumb's CEO acknowledged two prior, smaller payout incidents involving mistaken coin distributions. The exchange reports recovering most of the miscredited assets, with only a fraction of the non-existent Bitcoin unrecovered.
The Bithumb incident occurs amidst broader concerns over South Korea's handling of digital assets, including past disappearances of seized Bitcoin from police and prosecutor's offices. These events collectively raise serious questions about the effectiveness of digital asset custody and oversight by authorities.