SEOUL, Feb 10 (AJP) -The Bithumb mispayment case is emerging as a major test for South Korea’s virtual asset regulatory system, as financial authorities move to use the findings to shape tougher oversight and future legislation.
The Financial Supervisory Service (FSS) said Tuesday that it is focusing on whether Bithumb’s internal control systems complied with the Act on the Protection of Virtual Asset Users, particularly rules requiring exchanges to hold virtual assets in amounts equivalent to customer deposits.
Regulators are also examining how a single employee’s input was able to trigger large-scale ledger distortions and whether real-time monitoring systems were operating properly.
Authorities are reviewing Bithumb’s reconciliation procedures, including how frequently the exchange compared its internal accounting records with actual wallet balances.
Bithumb has confirmed that it conducted reconciliation once a day, completing checks on the afternoon of the following trading day. This contrasts with rival Upbit, which operates an automated system that verifies reserves and ledger balances at five-minute intervals.
Officials are also investigating how quickly the mispayment was detected. According to industry sources, the error was identified within about 20 minutes after a staff member reviewed a test account that had been included among event recipients.
The FSS said the inspection results would be reflected in discussions on the second phase of virtual asset legislation, with a focus on preventing the recurrence of so-called “ghost coin” incidents. FSS Governor Lee Chan-jin has said that resolving such issues is essential for the virtual asset market to gain institutional credibility.
Lawmakers and regulators are also reviewing governance standards at crypto exchanges. Some officials said the case has added momentum to proposals to cap major shareholders’ ownership stakes at 15 to 20 percent to strengthen internal oversight.
The FSS is expected to continue intensive inspections this week and may extend the probe if necessary. Depending on the outcome, Bithumb could face administrative sanctions, including fines and possible disadvantages in future business license renewals.
Bithumb responded that it is strengthening internal controls and reviewing its operating systems, regardless of the investigation outcome.
The exchange said it has launched an internal audit to identify the root cause of the error and assess weaknesses in its accounting and approval processes. It is also conducting a comprehensive review of its ledger management and reconciliation systems.
Bithumb said it is reinforcing safeguards to prevent a recurrence, including tightening access controls, strengthening multi-step verification procedures for asset transfers, and expanding automated monitoring systems that compare internal records with actual wallet balances.
The company said it is also reviewing its reconciliation schedule, which currently involves comparing ledger entries and on-chain balances once a day. Officials indicated that the frequency and scope of these checks may be expanded, following criticism that the system was insufficient to detect abnormal transactions in real time.
Regarding customer protection, Bithumb said it has taken steps to secure affected assets and prevent unauthorized withdrawals linked to the mispayment. The company said it is reviewing compensation and recovery measures in line with regulatory guidance.
The incident occurred during a routine event payout at Bithumb last Friday, when an intended reward of 2,000 won ($1.20) per user was mistakenly entered as 2,000 bitcoins. As a result, about 620,000 bitcoins were credited to 249 customer accounts.
Bithumb said it intervened within minutes after detecting the error. However, during the brief window before the system was frozen, about 1,788 bitcoins were sold on the market, triggering sharp volatility and pushing prices down by as much as 17 percent at one point.
Prices have since stabilized, but the exchange said it has recovered only 99.7 percent of the misallocated assets, with about 125 bitcoins still unretrieved.
The episode bared a yawning discrepancy between Bithumb’s internal accounting records and its actual asset holdings.
The exchange did not possess the 620,000 bitcoins that were credited to customer accounts.
According to its disclosures, Bithumb’s total bitcoin reserves are estimated at around 43,000 coins, with only about 175 bitcoins owned directly by the company, excluding customer deposits. This means the platform temporarily recorded balances far exceeding its actual holdings, creating so-called “ghost coins” within its internal ledger.
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