Nikolas Sargeant
South Korean lawmakers are intensifying pressure on financial regulators following a major error at cryptocurrency exchange Bithumb that mistakenly credited customers with 620,000 Bitcoin the platform did not hold, reigniting concerns about oversight of the country's rapidly expanding digital asset market.
The Financial Services Commission failed to detect critical flaws in Bithumb's internal systems despite conducting at least three inspections since 2022. Opposition lawmakers characterized the incident as more than a technical mishap, pointing to structural weaknesses in cryptocurrency market regulation and oversight.
Bithumb mistakenly credited 2,000 Bitcoin per user instead of 2,000 Korean won (approximately $1.40) during a promotional event on February 6, distributing a total of 620,000 BTC the exchange did not actually possess. The error briefly triggered customer attempts to sell the erroneously credited assets.
Regulatory criticism intensified as the FSC delayed its investigation into Bithumb. The authority opened the probe on February 10, initially expected to conclude February 13, but has extended the timeline to the end of February citing need for additional review. Officials emphasized they would take "stern legal actions against acts that harm the market order."
The FSC's inspection reportedly covers not only the recent 620,000 BTC error but also two similar prior incidents. During an emergency National Assembly session on February 11, Bithumb's leadership acknowledged two previous cases where coins were mistakenly distributed and later recovered, though amounts were minimal.
Bithumb stated it recovered the majority of miscredited assets, with only 125 BTC ($8.6 million) of the non-existent 620,000 BTC remaining unrecovered. The incident arrives as authorities face renewed scrutiny over custody and security of seized digital assets.
In 2021, 22 BTC worth approximately $1.5 million at current prices disappeared from a cold wallet at a Seoul police station during a nationwide audit. A separate August 2025 case saw 320 BTC vanish from a prosecutors' office, reportedly due to leaked password. Authorities disclosed yesterday the full amount had been recovered after the attacker returned funds, though the timing of disclosure amid the Bithumb investigation raised questions.
Lawmakers and industry observers argue these incidents underscore persistent weaknesses in authorities' oversight and custody of digital assets.
