South Korea Tightens Crypto Exchange Rules After Bithumb Error

South Korea is tightening oversight of crypto exchanges after a major operational error exposed systemic risks. At Bithumb, an employee mistakenly entered a reward in Bitcoin instead of Korean won, leading to a false allocation of 620,000 BTC—far exceeding the platform’s actual holdings.

In response, the Financial Services Commission now requires exchanges to reconcile internal records with real wallet balances every five minutes, replacing slower checks that could occur only once daily.

Regulators are also mandating a “kill switch” to automatically halt trading if major discrepancies appear, while audits will shift from quarterly to monthly with stricter asset-level disclosures. A joint review with the Financial Supervisory Service found that many platforms lacked real-time monitoring and rapid response mechanisms.

The new rules push crypto exchanges toward stricter, real-time risk controls similar to traditional finance. For users, the incident highlights a key risk: displayed account balances are only as reliable as the systems verifying them.