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- South Korea orders crypto exchanges to verify assets every five minutes after audit gaps.
- Audit finds major exchanges reconcile balances daily, weakening mismatch detection systems.
- New rules mandate stronger controls, monthly audits, and stricter checks on payouts.
South Korea has introduced stricter rules for crypto exchanges after regulators found gaps in internal controls. Authorities now require faster verification of assets to reduce risk and improve oversight across trading platforms operating in the country.
The Financial Services Commission announced the regulatory measures after the talks held with major exchanges and the Digital Asset Exchange Alliance. The announcement followed an emergency audit following the Bithumb payout incident.
Regulators Flag Delays in Asset Verification
The audit revealed that three out of the five biggest crypto exchanges reconcile accounts once per day. According to the regulators, this delay reduces the possibility of spotting mismatches in time. Moreover, systems aimed at suspending transactions in cases of significant differences proved ineffective.
The inspection was triggered by an error at Bithumb in February. The exchange mistakenly sent 620,000 Bitcoin to 249 users during a promotion. It recovered 99.7% of the funds the same day.
Some of the funds had previously been liquidated. The remaining 1,788 Bitcoin were covered from the corporate treasury fund. The issue became a point of discussion as regards the operational controls on the crypto exchanges in South Korea.
According to the guidelines, all the crypto exchanges are supposed to do regular automated audits every five minutes. They should reconcile the internal ledgers against the wallet balances. In addition, they are supposed to establish specific threshold levels for automatically shutting down.
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Stricter Controls for Crypto Exchanges
The regulators have further instructed that some changes be done within the exchanges. High-risk transactions like promotional giveaways will need higher levels of audit and third-party verification.
The exchanges must need to separate high-risk accounts from their regular operations. There will also be the need to use automated solutions for the verification of payments prior to their execution.
Source: CoinGecko
More stringent requirements for audit processes. In the future, audits will happen on a monthly basis, not quarterly. There will also be a need to produce wallet and ledger balance reports.
Additionally, Bithumb has announced that it will push back its IPO after 2028. Its focus will be on strengthening controls up until 2027. It has been collaborating with Samjong KPMG on these initiatives.
On the other hand, Naver Financial has delayed its share swap with Dunamu. The voting process is scheduled for August 18, while the completion date will be September 30.
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