- Bithumb’s mistaken US$43 billion (AU$60.63 billion) Bitcoin transfer triggered a sharp, isolated market sell-off.
- The Bank of Korea flagged weak controls and is pushing circuit breakers and error-detection systems.
- Lawmakers are weighing tighter rules to align crypto exchanges with traditional financial safeguards.
Regulators in South Korea are considering stronger controls for cryptocurrency exchanges after a multi-billion-dollar error at Bithumb triggered significant market disruption. The Bank of Korea has recommended introducing circuit breakers to halt trading during periods of abnormal activity or sharp price movements.
The recommendation follows a February mistake in which Bithumb transferred around 620,000 Bitcoin, worth roughly US$43 billion (AU$60.63 billion), to users due to a clerical error. The issue arose when a promotional reward was incorrectly entered in Bitcoin instead of Korean won.
Related: Michael Saylor Signals More Bitcoin Buys as Prices Pull Back From Local Highs Above $73K
Trading Mistake Exposes Gaps
The incident led to widespread panic selling, pushing Bitcoin prices on Bithumb down by approximately 15% as users attempted to cash out. Prices on other exchanges did not reflect the same drop, underscoring the isolated impact of the error.
While the exchange halted trading and reversed the transactions shortly after discovering the issue, some funds had already been sold, requiring Bithumb to absorb the losses. The delay in identifying the error, which was reported at around 20 minutes, contributed to the scale of the disruption.
The Bank of Korea attributed the incident to weak internal controls and lower regulatory standards compared with traditional financial institutions. It has proposed mandatory safeguards, including systems to detect human errors and automatically pause trading during extreme volatility.
These recommendations are expected to be considered as part of new legislation aimed at strengthening oversight and improving the resilience of South Korea’s digital asset market.
Related: Australia Establishes First-Ever Digital Asset Regulatory Framework
Credit: Source link
