South Korean authorities are facing escalating scrutiny following a significant error by the cryptocurrency exchange Bithumb, which mistakenly credited users with Bitcoin (BTC) that it did not possess. This incident, which occurred during a promotional campaign on February 6, involved the erroneous distribution of a total of 620,000 BTC, equating to 2,000 BTC per user instead of the intended 2,000 Korean won (approximately $1.40) per participant. The situation ignited a brief panic among users eager to sell their mistakenly credited assets, raising urgent questions about regulatory oversight in the rapidly evolving digital asset sector.
Lawmakers have expressed mounting frustration with the Financial Services Commission (FSC) for failing to identify critical vulnerabilities within Bithumb”s internal systems, despite conducting at least three inspections since 2022, as highlighted by The Korea Times. Representative Kang Min-guk, from the main opposition People Power Party, emphasized that this was not merely a technical error but indicative of broader structural weaknesses in the South Korean cryptocurrency market, including regulatory gaps and inadequate oversight.
The FSC initiated its investigation into Bithumb on February 10, announcing intentions to pursue “stern legal actions” against any activities that disrupt market order. Originally slated for completion by February 13, the probe has been extended, with authorities now aiming for a conclusion by the end of February, citing the need for a more thorough review, according to multiple local news sources.
In response to the incident, Bithumb”s CEO, Lee Jae-won, noted that this was not the first time the exchange had encountered payout errors, having previously experienced two minor incidents where funds were mistakenly distributed but later retrieved. He stated, “There were two previous cases in which coins were mistakenly paid out and later recovered, but the amounts were minimal,” during an emergency session of the National Assembly on February 11.
As of now, Bithumb has reported recovering the vast majority of the miscredited funds, with only 125 BTC (around $8.6 million) still unrecovered from the total erroneous allocation of 620,000 BTC. However, this incident is compounded by ongoing concerns regarding the security and custody of digital assets held by South Korean authorities, which have faced embarrassment over the loss of seized cryptocurrencies in previous cases.
In 2021, 22 BTC valued at approximately $1.5 million went missing from a cold wallet at the Gangnam Police Station during a nationwide audit. Similarly, in August 2025, 320 BTC vanished from the Gwangju District Prosecutors” Office, reportedly due to a compromised password. Authorities recently announced the recovery of the full amount after the hacker returned the funds, a disclosure that has raised eyebrows amid the ongoing FSC investigation into Bithumb.
These incidents serve to highlight the persistent weaknesses in regulatory oversight regarding digital assets in South Korea and have sparked a broader conversation about the security measures necessary to protect both exchanges and users in a rapidly growing market.
