South Korea Demands Real-Time Crypto Controls After Bithumb Transfer Shock

• Bithumb promo glitch credited 620,000 BTC, exposing a daily reconciliation blind spot

• FSS urges real-time ledger-to-wallet checks as Korea drafts tougher crypto rules

• 86 users sold about 1,788 BTC in 35 minutes, triggering a sharp on-platform price dip

South Korea increased scrutiny on Bithumb after a transfer error credited huge Bitcoin balances to customer accounts. Bitcoin traded near $66,895 on February 11, as the incident rattled local order books during Asian hours. Lawmakers now demand real-time controls to stop phantom payouts and sudden losses for ordinary traders.

Bitcoin transfer error exposes one-day reconciliation gap

Bithumb credited about 620,000 Bitcoin in a promotion meant to pay 620,000 won in small prizes on February 6. The mistaken unit conversion created ledger balances far above the exchange’s reported reserves and risk limits by more than tenfold. As a result, the National Assembly of South Korea summoned Lee Jae-won and pressed him on governance failures during a committee hearing.

Bithumb relied on internal ledgers that updated holdings only after a daily reconciliation cycle for withdrawals. The exchange collected transaction records for about 24 hours, then aligned ledger totals with actual wallets each day. Therefore, the system left a full-day window where outgoing transfers could exceed available crypto in practice.

Officials compared that approach with rival exchange Upbit, which reconciles wallet balances every five minutes at scale. Regulators still viewed five minutes as too slow for large exchanges that move funds continuously on busy days. Consequently, policymakers set real-time matching as the next baseline for licensing and supervisory reviews after the incident.

Bitcoin market shock hits users through forced liquidations

Bithumb detected the error within minutes, yet it froze affected accounts about 35 minutes later on the platform. During that window, 86 users sold roughly 1,788 Bitcoin and amplified a brief price drop inside Bithumb’s market that evening. Some users also withdrew proceeds to bank accounts, while others swapped into altcoins before the freeze arrived immediately.

The unexpected selling wave pushed prices lower, and it also triggered automated margin protections rapidly on leveraged positions. More than 30 customers faced forced liquidations after they pledged Bitcoin as collateral for loans without warning. Meanwhile, customer complaints focused on platform-driven losses because normal price discovery did not cause the liquidations at the time.

Bithumb targeted relief planning on panic selling losses and liquidation harm tied directly to the malfunction now. The exchange reversed 99.7% of erroneous ledger entries and restored most balances by internal accounting adjustments overnight. However, unresolved cases now hinge on trade reversals, repayment terms, and the timing of withdrawals for customers.

Bitcoin rules tighten as watchdog urges real-time verification

The Financial Supervisory Service told lawmakers to require real-time checks between exchange ledgers and actual holdings across all licensed venues. The watchdog argued that banking-style monitoring cuts operational risk and blocks rapid misuse of mistaken credits in the future. Accordingly, it urged lawmakers to mandate linked systems and stronger internal controls in upcoming digital asset rules this year.

South Korea already enforces strict customer identification and bank account linkage for major exchanges through regulated banking partners. Yet gaps remain because existing rules emphasize anti-money laundering compliance more than intraday settlement safety operationally. Therefore, the incident revived debate on licensing conditions, audit duties, and proof-of-reserve disclosure for platforms nationwide.

Bithumb said it redesigned its payout workflow, and it also strengthened cross-checks before any large transfer posts after internal review. The exchange contacted about 80 customers who cashed out and requested voluntary repayment in won equivalents in person. If talks fail, civil claims could seek Bitcoin returns instead of cash, increasing legal exposure as prices move against recipients.