South Korean Lawmakers Question Regulatory Oversight After Bithumb’s 620,000 BTC Error
How Did Bithumb Credit Bitcoin It Didn’t Hold?
South Korean lawmakers are questioning financial regulators after crypto exchange Bithumb mistakenly credited users with Bitcoin it did not possess, triggering a brief rush to sell and raising concerns about internal controls at one of the country’s largest trading platforms.
According to local reporting, Bithumb credited users with 2,000 Bitcoin per account instead of 2,000 Korean won (around $1.40) during a promotional event on Feb. 6. The error resulted in a total of 620,000 BTC being reflected in customer accounts — assets the exchange did not actually hold.
The discrepancy created a short-lived window in which users attempted to liquidate the mistakenly credited balances. Bithumb later said it recovered most of the miscredited assets, with 125 BTC, valued at about $8.6 million, still unrecovered out of the 620,000 BTC total.
The scale of the accounting error — even if largely reversed — has drawn scrutiny over system safeguards and transaction validation processes at major Korean exchanges.
Why Are Lawmakers Targeting the Financial Services Commission?
Members of the National Assembly have turned their attention to the Financial Services Commission (FSC), arguing that the regulator failed to identify weaknesses in Bithumb’s internal systems despite conducting at least three inspections since 2022.
Representative Kang Min-guk of the opposition People Power Party described the episode as more than a technical glitch, pointing to deeper problems in the structure of the domestic crypto market and gaps in supervision.
The FSC opened a formal investigation on Feb. 10 and said it would take “stern legal actions against acts that harm the market order.” The probe was initially expected to conclude by Feb. 13 but has since been extended to the end of the month to allow for further review, according to multiple local reports.
Investor Takeaway
Have Similar Incidents Happened Before?
During an emergency National Assembly session on Feb. 11, Bithumb CEO Lee Jae-won acknowledged prior payout errors. “There were two previous cases in which coins were mistakenly paid out and later recovered, but the amounts were minimal,” he said.
The FSC’s current inspection reportedly covers not only the 620,000 BTC credit error but also those earlier incidents. Lawmakers have questioned whether repeated payout mistakes indicate systemic weaknesses rather than isolated operational faults.
While Bithumb recovered most of the mistakenly credited Bitcoin, even temporary misallocations of that scale raise concerns about reconciliation controls, internal audit processes, and real-time balance validation — particularly in a market where customer confidence depends heavily on asset integrity.
Why Does This Matter for South Korea’s Crypto Oversight?
The Bithumb case comes as South Korean authorities face renewed attention over the custody and security of digital assets in their own possession. In 2021, 22 BTC disappeared from a police cold wallet during a nationwide audit. In a separate August 2025 case, 320 BTC vanished from the Gwangju District Prosecutors’ Office due to a reportedly leaked password. Authorities later said the funds were returned by the hacker.
Taken together, these incidents have fueled criticism that oversight mechanisms — both at exchanges and within government agencies — have not kept pace with the scale of the country’s digital-asset activity.
South Korea remains one of the most active retail crypto markets globally, with high participation rates and strong trading volumes. That depth increases the systemic impact of operational errors. A mistaken credit of this size, even if reversed, exposes the potential for rapid market distortion when internal safeguards fail.
