"Crypto Exchanges Should Be Regulated to the Same Standard as Financial Firms"

FSC Responds to Lawmakers’ Questions

Bithumb CEO Apologizes for "Inadequate Internal Controls"

Financial regulators, working to contain Bithumb’s erroneous distribution of 620,000 bitcoins, signaled plans to impose regulations on exchanges on par with those applied to financial companies. Summoned to the National Assembly, Bithumb CEO Lee Jae-won bowed his head in apology.

At an emergency hearing on the “Bithumb incident” held by the National Assembly’s National Policy Committee on the 11th, Kwon Dae-young, vice chair of the Financial Services Commission (FSC), said, “The level of regulation for crypto-asset exchanges should be aligned with that for financial companies,” adding, “We will accelerate second-phase legislation on crypto assets and, even before the law takes effect, strengthen guidance and supervision so operators implement internal control standards.”

Financial Supervisory Service (FSS) Governor Lee Chan-jin stressed that systems matching exchanges’ on-hand crypto holdings with ledger balances must be linked in real time. Lee said, “If ledger balances and actual balances do not match in real time, system stability cannot be secured,” adding, “Samsung Securities (where the 2018 ‘phantom shares’ incident occurred) overhauled its IT systems so entries exceeding the total number of issued shares cannot be input in the first place.”

Appearing before the National Assembly that day, Lee said ahead of questioning, “As the person ultimately responsible for this incident, I sincerely apologize,” bowing his head. He said the incident was caused by a mistake by an assistant manager-level employee in charge of a customer event and added that he “keenly recognizes” shortcomings in the internal control system. He continued, “We promise to meet various requirements under regulation and supervision comparable to those for financial companies,” adding, “We will set a broad scope for relief and compensation for damages from this incident, including panic selling and forced liquidation.”

Regulators on the day also began on-site inspections of four exchanges—Upbit, Coinone, Korbit, and GOPAX—in addition to Bithumb. They plan to review verification frameworks for assets held by exchanges and overall internal controls. The FSS has already converted its on-site inspection of Bithumb, launched on the 10th, into a formal examination. Lee said, “We have deployed eight examiners and will produce the examination results as quickly as possible within this week.”

Reporter Shin Yeon-su sys@hankyung.com