South Korea’s financial watchdog said a $40 billion bitcoin giveaway by local exchange Bithumb exposed serious weaknesses in cryptocurrency systems and regulation.
The exchange said it accidentally distributed bitcoin as promotional rewards, triggering a sharp selloff before transactions were suspended and an investigation launched.
Regulators said the incident highlighted structural flaws in virtual-asset systems, strengthening the case for tougher oversight as digital assets move toward mainstream finance.
The watchdog said significant upgrades to regulatory frameworks are needed as cryptocurrencies are gradually integrated into the legacy financial system.
South Korea introduced a crypto investor protection law in 2024 and plans another bill to expand oversight, including rules on stablecoins and digital assets.
Officials added that market stability must be ensured before approving products such as spot bitcoin ETFs, stressing caution despite industry growth ambitions.
