 ▲ Bithumb begins compensation for erroneous Bitcoin distribution |
Consumer losses are snowballing as authorities draw their knives following 64 forced liquidations linked to an unprecedented incident at virtual asset exchange Bithumb involving the erroneous distribution of about 60 trillion won worth of Bitcoin.
South Korea’s Financial Supervisory Service has formally upgraded its on-site inspection into a full-scale examination and signaled a high-intensity probe, seeking to uncover the truth behind the “ghost coin” incident that went beyond a simple system error to shake market order and to directly prevent the spread of consumer harm.
According to financial authorities and industry sources on the 10th, the watchdog notified Bithumb of the launch of an official inspection and began a full investigation just three days after starting on-site checks on the 7th. A senior official said the agency views the matter very seriously and will deal sternly with actions that undermine market order.
Investigators are focusing on how 620,000 bitcoins—13 to 14 times the approximately 46,000 bitcoins Bithumb is estimated to actually hold—were generated and distributed within the system. The case raises strong suspicions of violations of the Virtual Asset User Protection Act and has amplified fundamental distrust of centralized exchanges’ “ledger-based trading,” a structural vulnerability of CEXs. Whether lax internal controls and real-time monitoring allowed a single staff member’s erroneous click to trigger an astronomical payout is also a key target of scrutiny.
Meanwhile, consumer losses from the incident are expected to exceed initial estimates. While Bithumb pegged direct customer losses at around 1 billion won, it was additionally confirmed that forced liquidations occurred in 64 collateralized lending accounts due to a price plunge after the mistakenly distributed bitcoins hit the market.
On the day of the incident, 1,788 bitcoins were dumped onto the market, sending prices briefly down to 81.11 million won and triggering a wave of forced liquidations as collateral values fell. In a report submitted to the National Assembly, Bithumb pledged to fully compensate forced liquidation losses. About 99.7% of the mistakenly distributed amount has been recovered, and recovery is reportedly underway for the 1,788 bitcoins already sold, in cash and other virtual assets.
Financial Supervisory Service Governor Lee Bok-hyun said the previous day that integrating the virtual asset market into the institutional framework would be impossible without resolving the ghost coin problem, adding that the inspection results will underpin strong safeguards in the second phase of virtual asset legislation. Some observers expect the incident to accelerate discussions on tighter regulations, including stricter shareholder eligibility reviews for exchanges.
*Disclaimer: This article is for investment reference only, and no responsibility is taken for investment losses based on it. The information should be interpreted solely for informational purposes.*