Seoul, February 10 (IANS). South Korea’s financial regulators have launched a formal investigation against local crypto exchange Bithumb. This investigation is being done on how Bithumb accidentally distributed bitcoins worth 60 trillion won, i.e. about $41.2 billion, even though it did not have that many bitcoins. According to industry sources, this matter is considered very serious.
Regulators informed Bithumb of the investigation on Monday, Yonhap News Agency reported. Three days before this, officials had gone to the exchange office and investigated.
An official of the Financial Supervision Service (FSS) said that the matter is being taken very seriously and strict legal action will be taken against anything that harms the market order.
The mistake occurred on Friday, when Bithumb accidentally sent 620,000 bitcoins to 249 customer accounts instead of 620,000 won during a promotional event. After this incident, heavy selling of Bitcoin started on the exchange, which created a stir in the market.
Bithumb said in its statement that most of the erroneously sent bitcoins were immediately withdrawn once the mistake was discovered. However, by then 1,788 bitcoins had already been sold, which could not be withdrawn.
Centralized crypto exchanges like Bithumb use a special computer system called a book-entry trading system. In this system, transaction information is kept in the exchange’s own records, rather than every transaction being recorded on a public blockchain. If this system is not handled properly, there can be a difference between the actual bitcoins and the bitcoins shown on record, which is called phantom balance.
According to the report, Bithumb held about 42,000 Bitcoins as of the end of September, of which all but 175 Bitcoins belonged to other customers. That means the exchange itself held very little Bitcoin.
This investigation is taking place at a time when new laws related to virtual assets are being discussed in the country’s Parliament. Meanwhile, the country’s financial watchdog has said that it will impose strict fines and strict rules on financial companies in cases of irregularities related to IT systems.
The Financial Supervision Service also said that new rules will be made to prevent such technical mistakes in the future. Under these rules, IT security will be strengthened and strict steps will be taken to protect consumers.
–IANS
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