In a shocking incident, South Korea”s cryptocurrency exchange Bithumb has found itself at the center of a significant financial blunder involving an erroneous distribution of Bitcoin (BTC) worth approximately $1.3 billion. The exchange”s CEO has acknowledged previous oversights in the company”s management practices following this unprecedented error, which resulted in the misallocation of 620,000 BTC to users during a promotional event.
The incident occurred on February 6, when participants in a promotional campaign were mistakenly credited with 2,000 BTC each, instead of receiving coins valued at just 2,000 won. This mistake inflated the total amount of bitcoins recorded as distributed to users to a staggering 620,000 BTC, far exceeding Bithumb”s actual holdings of around 42,800 BTC. The error has prompted a deeper examination of the exchange”s internal controls, ledger management, and the overall regulatory framework governing cryptocurrency exchanges in South Korea.
Despite multiple inspections by the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) over the past few years, significant vulnerabilities in Bithumb”s systems remained undetected. According to Rep. Kang Min-guk of the People Power Party, the FSC conducted one review in 2022 and two in 2025, while the FSS performed three inspections in the same timeframe. Alarmingly, none of these audits identified discrepancies between Bithumb”s actual bitcoin holdings and its accounting records.
In light of the incident, Rep. Han Chang-min of the Social Democratic Party has criticized the regulatory bodies for their apparent failure to conduct thorough investigations, suggesting that their reviews may have been more procedural than effective. The FSS has announced that its investigation will continue through February, focusing on potential breaches related to investor protection, anti-money laundering protocols, and systemic flaws within Bithumb.
As the fallout from this incident unfolds, an emergency team from regulatory authorities, along with the Digital Asset eXchange Alliance, is actively assessing asset verification and internal control measures at other prominent exchanges in South Korea, including Upbit, Coinone, Korbit, and GOPAX. The findings from these evaluations are expected to have a significant impact on self-regulatory initiatives and future legislative developments in the cryptocurrency sector.
In a separate but related event, Upbit recently faced a $38.5 million outflow of Solana (SOL), leading to frozen withdrawals. Meanwhile, authorities have successfully recovered 320.8 BTC previously seized in a criminal case, which had gone missing due to a mishap involving a phishing site.
As investigations into Bithumb”s operational weaknesses continue, the broader implications for South Korea”s cryptocurrency market and regulatory landscape remain to be seen.
