South Korea's Financial Supervisory Service (FSS) has initiated an investigation into Bithumb following an erroneous transfer incident involving 620,000 bitcoins, significantly exceeding the exchange's actual holdings. FSS President Lee Chan-jin described the situation as a "disaster" and emphasized the need for a large-scale probe into "paper trading," where virtual assets not actually held are traded. The investigation aims to determine if Bithumb engaged in illegal negligence and to develop countermeasures. Lee Chan-jin highlighted the potential for severe regulatory actions, including sanctions at the level of licensing rights, should the Digital Asset Basic Act be enacted. The incident has raised concerns about the credibility of virtual asset trading platforms, as Bithumb reportedly traded 'virtual' currencies it did not possess. The FSS is also reviewing the practices of other trading platforms to prevent similar occurrences.