South Korea’s financial watchdog is calling for much tougher crypto laws after a local exchange, Bithumb, accidentally gave away over $40 billion in bitcoin to its customers. The massive mistake happened on Saturday during a promotion that went horribly wrong.
When Bithumb realized the error, the market was already in a frenzy. The “free” money triggered a huge selloff on the exchange as people tried to cash out their unexpected windfall. Lee Chan-jin, the governor of the Financial Supervisory Service, told reporters that this disaster proves crypto companies have major holes in their security and computer systems. He said the government will now look closely at these technical failures as they write new laws to control digital assets.
So far, Bithumb has managed to get most of the money back. They have retrieved about 99.7% of the 620,000 bitcoin they sent out by mistake. Even for the small group of people who managed to sell their coins before Bithumb froze transactions, the exchange has already recovered 93% of those funds. Lee made it clear that anyone who sold the accidental coins is legally required to give the money back to the exchange.
One of the most troubling parts of the story involves reports that Bithumb gave away more bitcoin than it actually held in its vaults. Lee called these “ghost coins” and said the industry cannot be trusted until companies stop this practice. He argued that if crypto wants to be treated like a legitimate financial asset, it cannot just appear out of thin air because of a software glitch.
This mess is also making the government think twice about future plans. While there has been talk about allowing bitcoin ETFs in South Korea, Lee is now taking a very cautious stance. He insists that the market needs to prove it is stable and safe before the government allows more people to invest. For now, the Bithumb blunder has put the entire Korean crypto industry under a microscope.
