South Korean cryptocurrency exchange Bithumb is facing a full-scale investigation by the Financial Supervisory Service (FSS) following an incident where approximately 620,000 Bitcoin were incorrectly disbursed. The regulatory body has shifted from an on-site inspection to a formal investigation, according to reports from The Chosun Ilbo and News1.
The erroneous distribution of Bitcoin, equivalent to a substantial sum in current market value, has triggered a sharp decline in Bitcoin prices and forced liquidations, raising concerns about investor protection. The FSS’s move to a full investigation signals the seriousness with which the regulator is treating the matter. This incident underscores the inherent risks within the rapidly evolving cryptocurrency market.
According to The Financial News, an FSS official stated the agency is taking the situation “extremely seriously” and will “severely punish” any actions that disrupt market order. The investigation will focus on how Bithumb was able to disburse a volume of Bitcoin exceeding its actual holdings.
Lee Chan-jin, head of the FSS, reportedly warned Bithumb that it must return the assets and face consequences if violations are discovered. He indicated that a special investigation team from the FSS, in conjunction with the Financial Crimes Division of the Ministry of Justice, could reach a conclusion within 48 hours. “If illegalities are found, we will transition to an investigation and demand the return of the assets,” Lee said, according to reports.
The FSS is also scrutinizing the potential involvement of “ghost coins” – potentially fraudulent or improperly registered digital assets – in the incident. KBS News reported that the financial authorities are implementing measures to continuously monitor exchange balances to prevent similar occurrences.
Reports also suggest that approximately 80 individuals may have improperly benefited from the erroneous Bitcoin disbursement and the FSS is seeking their cooperation in returning the funds. The FSS Chairman warned that the incident represents a “disaster,” noting that the incorrectly entered Bitcoin was actually traded. MBC News detailed concerns about the potential for manipulation within the virtual currency market.
Upbit, another major South Korean cryptocurrency exchange, has reportedly implemented safeguards to prevent similar incidents, utilizing dedicated accounts for promotional events to isolate potential errors.
