FSS Extends Probe into Bithumb's 'Ghost Coins' Until End of Month

The Financial Supervisory Service has decided to further look into Bithumb's erroneous Bitcoin payment incident until the end of this month.

According to the financial authorities on the 19th, the Financial Supervisory Service extended the on-site inspection period for the Bithumb erroneous payment incident from the 13th to the end of this month. Although Financial Supervisory Service Governor Lee Chanjin had said during an on-site questioning session at the National Assembly that he would receive the inspection results by the 13th, it appears that more time was deemed necessary.

On the 6th, Bithumb mistakenly entered the unit as "Bitcoin" instead of "won" when paying out prize money for one of its own events, resulting in an erroneous payment of 620,000 Bitcoins instead of 620,000 won. The reason it could pay out more than its actual Bitcoin holdings (about 42,000 Bitcoins as of the third quarter of last year) was its use of a book-entry transaction method. Bithumb stored coins deposited by customers in its own wallet and, whenever trades were executed, it did not record them directly on the blockchain but only changed the balances on its internal ledger.

The Financial Supervisory Service has increased the number of personnel in charge to eight and is closely examining Bithumb's potential violations of user protection and anti-money laundering obligations. In particular, it is focusing its inspection on the structure of the IT system that allowed coins not actually held to be paid out, as well as on the asset verification framework.

An official from the Financial Supervisory Service said, "We also plan to closely examine past erroneous payment cases through this inspection."

Meanwhile, an "emergency response task force" formed mainly by the financial authorities and the Digital Asset eXchange Alliance (DAXA) has, since the 11th, been reviewing the asset verification frameworks and overall internal controls of four other exchanges besides Bithumb: Upbit, Coinone, Korbit, and Gopax. Any shortcomings identified in the review are expected to be reflected in the second-phase virtual asset legislation going forward.

This content was produced with the assistance of AI translation services.