- Bithumb mistakenly credited users with 2,000 BTC each during a promotion, creating a false record of 620,000 BTC distributed.
- South Korean regulators face criticism after multiple inspections failed to detect discrepancies in the exchange’s internal controls.
- Authorities have expanded investigations into Bithumb and other major exchanges, while a separate lost Bitcoin seizure case was recently resolved.
South Korea’s financial watchdogs are taking heat after a stunning systems failure at Bithumb exposed serious internal weaknesses. Despite multiple inspections by the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS), a critical vulnerability slipped through. That gap allowed a single employee to trigger massive Bitcoin transfers without immediate detection. Not exactly a small oversight.
Rep. Kang Min-guk revealed that the FSC reviewed Bithumb once in 2022 and twice again in 2025, while the FSS conducted three separate inspections over that stretch. Yet none of those reviews flagged discrepancies between actual Bitcoin reserves and the exchange’s accounting records. On paper, everything looked fine. In reality, it clearly wasn’t.
620,000 Bitcoin Error Sparks Political Backlash
The issue came to light on February 6 during what was supposed to be a routine promotional event. Instead of crediting users with coins worth 2,000 won, roughly $1.38, the system mistakenly credited each eligible user with 2,000 BTC. Yes, 2,000 whole bitcoins per user. The internal ledger ended up reflecting an eye-watering 620,000 BTC “distributed,” even though Bithumb reportedly holds only around 42,800 BTC.
Lawmakers were quick to react. Rep. Han Chang-min questioned whether regulatory inspections had become little more than box-ticking exercises. Others argued the incident revealed deeper flaws in internal controls, ledger reconciliation, and oversight practices. The FSS has now extended its investigation through February, examining potential violations tied to investor protection, anti-money laundering compliance, and broader system weaknesses.
Bithumb CEO Lee Jae-won admitted there had been two smaller system errors in the past that were resolved internally. Those incidents are now under review as well. Meanwhile, authorities and the Digital Asset eXchange Alliance (DAXA) have launched emergency checks at other major exchanges, including Upbit, Coinone, Korbit, and GOPAX. The findings could shape future self-regulatory standards and even influence upcoming crypto legislation in the country.
Another Bitcoin Mishap, Recovered at Last
This controversy follows another embarrassing episode just weeks earlier. The Gwangju District Prosecutors’ Office disclosed that 320.8 bitcoins, worth around 40 billion won, had vanished from custody after being seized in a criminal case. The funds were originally confiscated from the daughter of operators behind an illegal overseas gambling operation that allegedly processed 390 billion won between 2018 and 2021.
The loss reportedly occurred when prosecutors accidentally accessed a phishing site while checking the wallet last August, exposing the seized assets. Surprisingly, the story didn’t end in permanent loss. On February 17, the missing bitcoins were returned to the prosecutors’ wallet, apparently voluntarily, after the hacker failed to liquidate them.
Authorities are still tracking the individual involved and coordinating with domestic and international exchanges to prevent further incidents. Taken together, these back-to-back mishaps have intensified scrutiny of South Korea’s crypto oversight framework. The systems exist. The inspections happen. But recent events suggest the safeguards, at least for now, may not be as airtight as officials once believed.
