The Bank of Korea has urged lawmakers to introduce crypto “circuit breakers” after a major error at Bithumb, where the exchange mistakenly credited users with 620,000 Bitcoin (BTC) instead of 620,000 Korean won in February. The error was valued at around $42 billion, prompting emergency trading disruptions and raising concerns over exchange risk controls.
In a Monday payments report, the central bank recommended mechanisms similar to the Korea Exchange, where trading is halted during extreme price swings. It said such systems are needed because the virtual asset industry lacks strong internal control mechanisms and operates with lower regulatory intensity than traditional financial institutions. The report warned that similar incidents could occur across other exchanges without preventive safeguards.
Bithumb Incident Triggered Panic Selling and Market Disruption
Following the error, Bitcoin prices on Bithumb fell sharply as users rushed to sell, triggering further panic selling. The exchange quickly suspended trading and reversed most transactions, but 1,788 BTC worth about $125 million had already been sold. Bithumb covered the shortfall using company reserves, while price gaps emerged between Bithumb and other exchanges like Upbit.
Proposed Systems for Error Detection and Asset Verification
The Bank of Korea also proposed automated systems to detect erroneous payments caused by human error, along with real-time verification comparing exchange-held assets with on-chain blockchain records to flag discrepancies and improve operational transparency.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.