KRO exchange error sparks FSS crackdown on crypto market abuse and oversight

South Korea’s Financial Supervisory Service (FSS) is intensifying oversight of crypto markets following Bithumb’s Feb 2, 2026, operational blunder that mistakenly distributed about $44B in bitcoin to users. The FSS will probe high-risk practices such as whale-driven price manipulation, pump-and-draw schemes, and issues with deposits/withdrawals, and will deploy AI to analyze trade and text data at second and minute intervals. The error mistakenly credited some users with 2,000 BTC instead of promotional rewards, exceeding Bithumb’s total holdings by 10 times. Bitcoin prices on the exchange fell 30% below the global average as affected users sold the assets; Bithumb restricted trading and withdrawals for 695 customers within 35 minutes and later waived fees and offered restitution plus 10% for panic sales. The FSS will report details to the National Assembly’s Political Affairs Committee on Feb 13, 2026, and may conduct on-site inspections of exchanges with deficient internal controls. It is also preparing to enforce the Basic Digital Asset Act, introducing stricter penalties for IT incidents and elevating security accountability for executives.