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South Korea Widens Crypto Exchange Checks as Bithumb CEO Apologizes for $40 Billion Bitcoin Error

Regulators opened a full inspection and began reviewing rival platforms after a promo setup mistake created vast off‑chain balances, pointing to tougher, bank‑level controls ahead.

Overview

  • Bithumb mistakenly credited roughly 620,000 bitcoins during a rewards event by entering BTC instead of KRW, creating “paper” balances on its internal ledger and triggering a brief, exchange‑only price plunge.
  • The exchange froze affected accounts within minutes; about 1,786–1,788 BTC were sold before the halt, and customer losses are estimated at around 1 billion won.
  • CEO Lee Jae-won apologized at a parliamentary hearing, acknowledged internal control failures, and pledged compensation for forced liquidations and users who sold in panic.
  • Bithumb says 99.7% of the phantom credits have been recovered, with remaining shortfalls covered by company funds as it contacts recipients and pursues further recovery.
  • The Financial Supervisory Service upgraded its probe to a full inspection and launched on‑site checks at other major exchanges through a DAXA task force, with officials signaling proof‑of‑reserves and bank‑grade internal controls as part of forthcoming reforms; legal experts say civil unjust‑enrichment claims support clawbacks from recipients.