Bank of Korea urges crypto exchanges to adopt circuit breakers after Bithumb’s $42B transfer error
South Korea’s central bank is pressing cryptocurrency exchanges to install trading “circuit breakers” and stronger internal controls after a clerical error at major exchange Bithumb resulted in an accidental transfer of roughly $42 billion in Bitcoin to customers.
In a payments report published Monday, the Bank of Korea (BOK) recommended that virtual-asset platforms adopt price-stabilizing curbs modeled on the Korea Exchange to pause trading during extreme volatility. The guidance follows a dramatic mishap in February when Bithumb’s systems treated a request for 620,000 Korean won (about $400) as 620,000 Bitcoin—sending the equivalent of roughly $42 billion worth of BTC to users.
The BOK warned that the virtual-asset sector currently lacks the internal control frameworks and regulatory scrutiny that govern traditional financial institutions. “Currently, the virtual asset industry lacks internal control mechanisms and faces lower regulatory intensity compared to established financial institutions,” the report said, adding that similar incidents could occur elsewhere unless preventive rules are strengthened.
The error sparked immediate chaos on the platform: recipients began selling the unexpected windfall, triggering a sharp sell-off and further panic among traders. Bithumb managed to pause trading and reverse most transfers within minutes, but 1,788 BTC had already been liquidated. The exchange later disclosed it used corporate reserves to cover a roughly $125 million shortfall.
To prevent repeat events, the central bank urged exchanges to implement systems that catch “erroneous payments caused by human error” and to run automated reconciliations that sync internal ledgers with blockchain records to flag asset discrepancies in real time.
The BOK’s recommendations come as South Korean lawmakers are shaping a new regulatory framework for digital assets. The central bank urged that these safety measures be incorporated into forthcoming legislation “to enhance the safety and transparency of virtual asset exchange operations.”
The episode underscores the operational and market-risk vulnerabilities facing crypto venues and adds momentum to calls for tighter controls and clearer rules as South Korea seeks to bring its fast-growing crypto industry under more robust oversight.
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