Korean banks review crypto partnerships after Bithumb bitcoin error

Korean banks are reviewing their partnerships with virtual asset exchanges following a payment error at Bithumb involving 62 trillion won (US$42.78 billion) worth of bitcoin.

KakaoBank and Kbank, which have agreements with exchanges like Coinone and Upbit, are assessing whether to renew their contracts amid concerns over reputational risk.

Bithumb mistakenly paid 620,000 bitcoins to 249 winners but canceled most transactions before recording them on the blockchain, resulting in only 1,788 bitcoins being transferred.

Despite low chances of sanctions from authorities for incidents at exchanges, banks are cautious about potential reputational damage linked to their connections.

KakaoBank plans to renew its yearly partnership with Coinone in Q3, while Kbank is watching the situation ahead of its contract expiration in October.

Kookmin Bank is set to review its contract with Bithumb and is requesting stronger internal controls.

The banks continue to monitor the situation closely.

🔗 Source: Chosunbiz

🧠 Food for thought

Implications, context, and why it matters.

Bank and exchange tie-ups are required for won trading and shape the market

Under Korea’s real-name framework, an exchange offering won-denominated trading needs a bank partner that issues real-name deposit and withdrawal accounts 1.
The one-exchange-one-bank rule has narrowed competition, leaving top won-trading venues with exclusive partners such as Upbit with Kbank, plus Coinone with KakaoBank 1.
Banks worry about reputation, yet walking away can cut off big pools of customer cash. Upbit deposits were 7.49 trillion won ($5.2 billion) at the end of the third quarter last year 1.
That pull keeps many banks in these deals, so they push exchanges to tighten internal controls instead of ending the relationship.

Bithumb’s error has sparked tougher checks from regulators

Bithumb’s internal ledger mistake still allowed trades to go through, which drew regulators’ attention 2.
Afterward, the Financial Services Commission, the Financial Intelligence Unit, plus the Financial Supervisory Service started emergency inspections at other large exchanges including Upbit and Coinone 3.
Policy talks now lean toward bank-style oversight, with guardrails like ledger integrity tests, sign-off for promotions, plus reconciliation steps 2.
Officials said inspection results will feed into the next phase of the government’s digital asset legislation 3.