South Korea's FSS to sanction Bithumb over 'ghost coin' incident

South Korea's Financial Supervisory Service (FSS) has initiated sanction proceedings against the crypto exchange Bithumb following a recent 'ghost coin' incident, MTN News reported. The FSS has determined that the grounds for sanctions are Bithumb's failure to reconcile its actual holdings with its on-ledger records, a violation of the Virtual Asset User Protection Act. The action focuses on the breach of ledger-keeping obligations, as current laws reportedly lack a direct basis for penalizing failures in internal controls. The incident occurred when an input error related to an event reward led Bithumb to create 620,000 BTC on its books, an amount more than 13 times its internal circulation. A key factor in the failure was that a single junior-level employee handled the process alone, indicating a breakdown of internal controls. Industry observers have noted the regulator's use of the ledger violation charge amid a regulatory vacuum, viewing the event as a man-made disaster similar to a past 'ghost stock' incident at Samsung Securities.