- Bank of Korea calls for a crypto market circuit breaker following Bithumb incident
- Bithumb mistakenly transferred 620,000 BTC (worth $43B) due to a unit input error
- Bitcoin-KRW pair dropped ~15%, leading to user losses
- 20-minute delay in detecting the error worsened the impact
- Regulatory gaps and weak internal controls highlighted by central bank
Bithumb Incident Triggers Regulatory Concerns
The Bank of Korea stated in its Monday Payment and Settlement report that the local cryptocurrency market requires a circuit breaker system similar to those used in traditional stock markets. The recommendation follows a February 6 incident involving Bithumb.
During a promotional campaign, Bithumb mistakenly transferred 620,000 bitcoin, valued at approximately $43 billion at the time, across hundreds of user wallets. The error reportedly occurred when a staff member entered the reward unit as BTC instead of Korean won (KRW). The incident caused the bitcoin-KRW trading pair on the platform to fall by around 15%, resulting in financial losses for users.
Delays and Control Failures Amplified Losses
The central bank attributed the incident to insufficient internal controls and weaker regulatory oversight in the digital asset market compared to traditional financial systems.
According to the report, Bithumb took approximately 20 minutes to detect the error. During that time, the exchange was unable to prevent the transferred bitcoin from being moved or sold, increasing the scale of losses. The Bank of Korea emphasized that exchanges should implement systems capable of detecting and immediately halting such operational errors.
Call for Circuit Breakers and Legal Framework
The report recommended introducing market-wide safeguards, including circuit breakers that can block unusually large transactions or temporarily halt trading during sharp price fluctuations.
The central bank also urged lawmakers to consider these measures as part of the upcoming Digital Asset Basic Act, which aims to establish a comprehensive regulatory framework for the cryptocurrency industry. Following the incident, Bithumb requested a court to freeze 7 BTC that it was unable to recover. The exchange has since faced increased scrutiny and investigations from local authorities. Recently, South Korea’s Financial Intelligence Unit (FIU) imposed a six-month partial suspension and a 36.8 billion won ($24.6M) fine on Bithumb for AML violations under the Special Financial Information Act. The violations were identified during inspections of major exchanges.
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