South Korea Watchdog Says $40 Billion Giveaway Shows New Rules Needed to Tackle Crypto Risks
South Korea’s Financial Supervisory Service FSS has called for tougher cryptocurrency regulations ⚖️ after a major operational error at local exchange Bithumb resulted in the accidental distribution of roughly $40 billion worth of Bitcoin 💰. The incident occurred during a promotional event in which the exchange intended to credit users with small cash rewards of about 2,000 won approximately $1.40 but mistakenly transferred around 620,000 BTC to nearly 700 user accounts. The error briefly caused sharp volatility on the platform 📉 with Bitcoin prices reportedly dropping by as much as 17% before stabilizing.
Authorities quickly intervened 🚨 and Bithumb suspended affected accounts while working to recover the misallocated assets. The exchange has since retrieved about 99% of the mistakenly distributed Bitcoin and announced it would absorb the remaining losses estimated at around $9 million using company funds.
FSS officials stated that the episode exposed serious weaknesses in internal control systems and operational safeguards within crypto exchanges. Governor Lee Chan jin emphasized that such incidents highlight structural risks in digital asset markets including concerns about the potential circulation of unsupported ghost coins 👻. The regulator stressed that stronger compliance standards tighter oversight and improved consumer protection measures 🛡️ are necessary before cryptocurrencies can be treated as stable mainstream financial instruments. The case has intensified policy discussions in South Korea around stricter licensing rules enhanced exchange accountability and more robust risk management frameworks for the digital asset industry.
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