(Feb 11): South Korean lawmakers hauled in Bithumb’s CEO on Wednesday (Feb 11) seeking answers over an erroneous US$40 billion bitcoin transfer triggered by human error, intensifying scrutiny of a crypto market that has eclipsed equities in retail participation.
At a parliamentary hearing, legislators pressed Bithumb CEO Lee Jae-won over a lack of internal controls after an employee mistakenly processed customer payouts in bitcoin rather than won during a promotional event last week.
“Bithumb gave away bitcoin that were not in the company’s possession, and that is what we call naked short selling,” Min Byeong-deok, a lawmaker from the ruling Democratic Party, said at the hearing. He added the exchange effectively distributed ‘ghost bitcoin’ in the market.
Trading was halted shortly after the episode on Friday evening as customers rushed to sell bitcoin, and the exchange has since been working to claw back funds. The CEO apologised earlier Wednesday, vowing to tighten oversight and prevent a repeat. The episode underscores vulnerabilities in South Korea’s breakneck crypto boom, where trading on domestic digital-asset exchanges has occasionally outpaced that of the Kospi and Kosdaq stock indexes — a dynamic rarely seen in other major markets.
“We sincerely apologise to the public who were deeply distressed by the erroneous overpayment in our promotional event,” Lee said in opening remarks.
The parliamentary grilling highlights growing political concern that operational lapses at major exchanges could undermine confidence in a sector that has become deeply embedded in household investing.
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“It is surprising that a system for preventing currency code errors failed to function,” said Kim Sanghoon, a lawmaker from the opposition People Power Party. He added that it would be premature at this stage to extend eligibility for issuing won-denominated stablecoins to cryptocurrency exchanges.
The Financial Supervisory Service launched an investigation into the incident, focusing on compliance systems and risk management at the country’s second-largest digital-asset platform.
“The government considers this incident a serious matter that has exposed risks related to virtual assets and vulnerabilities in internal control systems,” Kwon Dae-young, vice chairman of the Financial Services Commission, said at the hearing.
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Kwon added that the government will seek concrete institutional reforms through an emergency response task force formed over the weekend, including inspections of all exchanges and monitoring for potential user harm.
Uploaded by Arion Yeow
