South Korean lawmakers are stepping up pressure on financial regulators after crypto exchange Bithumb mistakenly credited customers with Bitcoin it did not hold, an error that briefly sparked a rush to sell and renewed questions about oversight of the country’s fast-growing digital-asset market.
Lawmakers said the Financial Services Commission (FSC) failed to detect critical flaws in Bithumb’s internal systems despite at least three inspections since 2022, The Korea Times reported Thursday.
Representative Kang Min-guk of the main opposition People Power Party said the incident was more than a technical mishap, claiming structural weaknesses in the crypto market, including gaps in regulation and oversight.
Bithumb mistakenly credited 2,000 Bitcoin (BTC) per user instead of 2,000 Korean won ($1.40) during a promotional event on Feb. 6, distributing a total of 620,000 BTC that the exchange did not actually hold.
FSC delays probe into Bithumb, intensifying accusations
Lawmakers’ criticism of the FSC intensified as the regulator delayed its inspection of Bithumb. The authority opened the investigation on Feb. 10, with FSC officials emphasizing they would take “stern legal actions against acts that harm the market order.”
The probe, initially expected to conclude Feb. 13, has been extended, with officials aiming to complete it by the end of February, citing a need for additional review, multiple local publications reported.
Bithumb CEO cites two prior payout incidents
The FSC’s inspection of Bithumb reportedly covers not only the recent 620,000 BTC error, but also two similar incidents in the past.
“There were two previous cases in which coins were mistakenly paid out and later recovered, but the amounts were minimal,” Bithumb CEO Lee Jae-won said during an emergency National Assembly session on Feb. 11.
From left: FSC vice chairman Kwon Dae-young, FSC Governor Lee Chan-jin and Bithumb CEO Lee Jae-won during a National Assembly session on Feb. 11. Source: The Korea TimesIn the latest incident, Bithumb said it managed to recover the majority of miscredited assets, with only 125 BTC ($8.6 million) out of the non-existent 620,000 BTC unrecovered.
Concerns over South Korea’s handling of crypto: The case of the disappearing Bitcoin
The Bithumb incident also lands as authorities face renewed embarrassment over custody and security of seized digital assets.
In 2021, 22 BTC worth about $1.5 million at current prices, disappeared from a cold wallet at Seoul’s Gangnam Police Station during a nationwide audit.
Related: Mirae Asset agrees to buy 92% stake in Korean exchange Korbit for $93M
A separate August 2025 case saw 320 BTC vanish from the Gwangju District Prosecutors’ Office, reportedly due to a leaked password. Authorities only reported yesterday that the full amount had been recovered after the hacker returned the funds, raising eyebrows as the disclosure comes amid the ongoing FSS investigation into Bithumb.
Lawmakers and industry observers say these incidents underscore persistent weaknesses in authorities’ oversight and custody of digital assets.
Magazine: How crypto laws changed in 2025 — and how they’ll change in 2026
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