South Korea Tightens Oversight of Crypto Exchanges After Bitcoin Incident

The regulator plans inspections, fines, and the use of AI to detect market manipulation.

Korea’s financial regulator strengthens oversight of cryptocurrencies

09.02.2026 - 11:10

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3 min

Key points:

South Korea’s financial authorities are tightening control over the cryptocurrency market after a major mistake at the Bithumb exchange.
The regulator plans to crack down on market manipulation, introduce automated trade monitoring, and increase accountability for exchanges and their management.

South Korea’s financial watchdog is stepping up supervision of the crypto market. The move follows a high-profile incident at Bithumb, where users were mistakenly credited with 2,000 bitcoins.

The Financial Supervisory Service (FSS) said it is launching routine inspections of practices that could undermine market order. The regulator will focus on price manipulation by large players, often referred to as “whales.” It will also examine schemes involving suspended deposits and withdrawals, as well as coordinated attempts to artificially pump prices using rumors and misinformation on social media.

A Wake-Up Call for the Regulator

At the same time, the FSS plans to roll out technical tools to automatically detect suspicious trading activity. These systems will be able to analyze trades almost in real time, down to the second and minute. The regulator also intends to use text analysis and artificial intelligence to identify potential market abuse.

The announcement came shortly after the incident at Bithumb. Last week, the exchange mistakenly credited some users with what were supposed to be small promotional rewards—but instead of minor amounts, they received at least 2,000 bitcoins. At the time, the error was valued at roughly $44 billion.

South Korea prepares new sanctions against crypto exchanges

Following inspections of Upbit, Bithumb, Coinone, Korbit, and GOPAX, the regulator is preparing personal and institutional sanctions.

Following the incident, bitcoin prices on the Korean market dropped about 30% below global averages. Some users attempted to quickly sell the assets they received. Bithumb responded by restricting trading and withdrawals for 695 clients. These restrictions were imposed about 35 minutes after the issue was discovered.

The FSS said the incident exposed vulnerabilities and risks associated with virtual assets. The regulator warned that on-site inspections of crypto exchanges could follow if weaknesses are found in internal control systems.

Beyond fighting market manipulation, the agency also announced tougher penalties for IT-related incidents in the financial sector. It plans to increase personal responsibility for top executives and chief information security officers. These measures will directly affect cryptocurrency trading platforms as well.

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