February 11, 2026
By Our Correspondent
The financial market watchdog in South Korea stated on Monday that stricter restrictions are required to address the weaknesses of cryptocurrencies, as evidenced by the local exchange Bithumb’s inadvertent distribution of almost $40 billion in bitcoin to consumers.
The cryptocurrency exchange revealed on Saturday that it had unintentionally distributed bitcoin to consumers as promotional incentives, which caused a steep decline in value.
At a press conference, Lee Chan-jin, the governor of the Financial Supervisory Service (FSS), stated that better regulatory mechanisms were required to handle such risks. He also stated that authorities would take the issues exposed by the incident seriously as they work to enact legislation bringing digital assets under regulatory control.
In this scenario, the structural issues with electronic systems for virtual assets are demonstrated. We are carefully investigating a number of areas, but the problem with electronic systems is one that worries us the most,” Lee stated. Since virtual assets are currently being incorporated into the legacy financial system, there are responsibilities to greatly enhance the regulatory framework,” Lee stated.
In order to better safeguard cryptocurrency investors after a market meltdown in 2022 brought on by the collapse of cryptocurrencies TerraUSD and Luna, South Korea passed the Virtual Asset User Protection Act in July 2024.
Legislators and policymakers are currently debating won-denominated stablecoins, and the government plans to present another bill that will expand regulatory oversight over digital assets.
A market expert, who asked to remain anonymous owing to the delicate nature of the subject, stated, “It is unfortunate that such an incident occurred at a time when financial firms were taking steps to support the industry, such as M&A deals, on expectations of more policy support, which will now be delayed.”
According to the findings of the first inquiry conducted by financial authorities, the exchange recovered 99.7% of the 620,000 bitcoins that Bithumb distributed on Friday. 93 percent of the 1,786 bitcoins that had previously been sold when the exchange halted transactions were recovered.
Regarding media claims that Bithumb distributed more bitcoin than it actually owned, Lee of FSS stated that before cryptocurrencies could become legacy financial assets, the problem of “ghost coins” would need to be fixed.
According to Lee, those who have already sold the unintentionally provided bitcoins are required by law to send them back to the exchange.
Lee stated that he will voice his cautious opinions about the government’s policy plan to offer spot bitcoin exchange-traded products, arguing that stability must be guaranteed before it can be considered a legacy financial asset.
