South Korea Eyes Stricter Crypto Oversight After Bithumb’s $40 Billion Error

South Korea plans to step up its regulation of digital assets after cryptocurrency exchange Bithumb accidentally gave away over $40 billion in bitcoin, Reuters reported Monday (Feb. 9).

Lee Chanjin, governor of the country’s Financial Supervisory Service (FSS), said at a press conference that the incident showed the need for legislation to apply regulatory control to digital assets, according to the report.

“There are many areas we are seriously looking into, and we are particularly worried about the issue of electronic systems,” Lee said, per the report.

South Korea introduced protections for crypto investors in 2024 with the Virtual Asset User Protection Act, which followed the 2022 collapse of the TerraUSD and Luna cryptocurrencies, according to the report.

The government now aims to expand that regulatory control over digital assets, per the report.

Bithumb announced Sunday (Feb. 8) that it accidentally gave out $40 billion in bitcoin to customers as part of a promotional rewards program. The company said it had since recovered nearly all the coins in question.

Bithumb had planned to distribute small cash rewards of 2,000 Korean won ($1.40) or more to each user as part of the promotion but accidentally sent at least 2,000 bitcoins to each customer instead.

“We would like to make it clear that this incident is unrelated to external hacking or security breaches, and there are no problems with system security or customer asset management,” Bithumb said in a statement.

Bithumb said in a Saturday (Feb. 7) press release that after the incident, it established a Company-Wide Crisis Management System to strengthen its ability to protect customer assets and ensure transaction stability, and an Investor Damage Relief Task Force to address victims’ concerns.

The company said it will also strengthen its asset verification system, implement an artificial intelligence system that will detect and block abnormal transactions, and assess its system with the help of a global security expert.

“Furthermore, Bithumb assumes full responsibility for all losses incurred by customers due to this incident,” the company said in the release. “While no direct losses to customer assets have been confirmed to date, some trades were executed at unfavorable conditions due to a sharp price drop during the incident period. To protect its customers, Bithumb will provide additional compensation, including full compensation.”