South Korea’s financial regulator has opened a full-scale investigation into cryptocurrency exchange Bithumb following a major operational error that briefly sent roughly $43 billion worth of bitcoin to user accounts.
According to Yonhap News Agency, the Financial Supervisory Service (FSS) escalated what was initially planned as a routine inspection into a comprehensive probe after uncovering the scale of last week’s incident. An FSS official told Yonhap the investigation is being carried out with “utmost seriousness,” warning that authorities will take firm action against any behavior that disrupts market order.
배영경
What Happened at Bithumb
The incident occurred on Feb. 6 during a promotional giveaway. A Bithumb staff member reportedly entered the reward unit as bitcoin instead of Korean won, resulting in the accidental distribution of about 620,000 BTC across hundreds of accounts. At the time, that amount was valued at approximately $43.1 billion.
The figure stood in stark contrast to Bithumb’s actual bitcoin holdings, which local media estimate were around 46,000 BTC. This discrepancy has become a central focus of the regulator’s investigation, particularly how such a large transaction could be generated and executed within the exchange’s internal systems.
Recovery Efforts and Compensation
Bithumb moved quickly to reverse the mistake. The exchange said it has recovered 99.7% of the mistakenly distributed bitcoin and reclaimed 93% of the 1,788 BTC that some users sold before the error was corrected. About 125 BTC remains unrecovered.
The mishap triggered a sharp drop of roughly 15% in the bitcoin–won trading pair on Bithumb’s platform. In response, the company pledged to compensate affected users at 110% of their losses. It also announced plans to strengthen internal controls and establish a 100 billion won ($68 million) user protection fund to cover potential future incidents.
Regulatory and Political Fallout
Despite the swift recovery, the episode has drawn heavy criticism from both regulators and lawmakers. Critics argue the error exposed deeper weaknesses in internal risk management and ledger controls, raising questions about how exchanges handle customer assets.
“This is no mere mishap,” wrote Na Kyung-won, a lawmaker from the opposition People Power Party, in a public statement.
She warned that systems allowing exchanges to transact assets they do not actually hold could create conditions similar to a bank run, threatening broader market stability.
Choi Bo-yoon, the party’s chief spokesperson, said the operational standards of domestic crypto exchanges had fallen to a “failing grade.” Members of the ruling Democratic Party echoed those concerns, pointing to “critical loopholes” in internal control and accounting systems.
The incident comes at a sensitive time as South Korea works to finalize the Digital Asset Basic Act, its second major piece of cryptocurrency legislation. In the wake of the Bithumb error, the ruling party announced plans to revive a proposal that would cap individual ownership stakes in crypto exchanges at 15% to 20%, a measure previously opposed by the industry.
Regulators and lawmakers are also reportedly discussing stricter rules that would place crypto exchanges under legal obligations closer to those faced by traditional financial institutions.
Looking Ahead
While no customer funds were permanently lost, the Bithumb incident has become a defining moment for South Korea’s crypto sector. It has highlighted the growing gap between rapid market growth and the systems needed to manage it safely. As the investigation unfolds, its outcome is likely to influence not only Bithumb’s future operations but also the direction of crypto regulation in one of Asia’s most active digital asset markets.
