Bithumb’s $43 Billion Bitcoin Blunder Causes Political Backlash in South Korea
South Korean lawmakers are increasing pressure on financial regulators after a system failure at Bithumb, the country’s largest cryptocurrency exchange, led to the accidental distribution of more than $43 billion worth of Bitcoin (BTC) earlier this month.
The February 6 incident has sparked political scrutiny of both the exchange itself and the agencies responsible for overseeing the physical asset market.
After the Bithumb Massive Bitcoin Mishap
According to in a local report by the Korea Times, members of the National Assembly are asking how such a large error could pass despite repeated regulatory checks.
Rep. Kang Min-guk of the main opposition People Power Party revealed that the Financial Services Commission (FSC) reviewed Bithumb three times between 2022 and 2025.
At the same time, the Financial Supervisory Service (FSS) conducted three separate inspections. Yet regulators failed to recognize what has been described as a critical structural weakness exchange system.
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Kang said the existing oversight mechanisms are inadequate. He pointed out that the safeguards are not enough to prevent a situation where a single worker can start a large money transfer. Kang says:
The episode is not just a technical error but a story that exposes deep structural weaknesses in the commodity market, including lax oversight and gaps in regulation.
Instead of entering user credits with Bitcoin worth 2,000 won – about $1.38 – the system accidentally entered 2,000 Bitcoin per user. In total, 620,000 Bitcoin were distributed incorrectly.
Lawmaker Han Chang-min of the minority Social Democratic Party also criticized the regulators, questioning whether the regulatory authorities had properly analyzed the exchange’s internal systems. “The authorities appeared to be changing the work on Bithumb despite their regulatory role,” Han said.
Comprehensive Crypto Oversight
In response to the incident, the FSS extended the deadline for its official investigation from February 13 to the end of the month, citing the need for more time.
An eight-member inspection team is now intensifying its review, focusing on potential violations related to investor protection and anti-money laundering (AML) compatibility.
Special attention is given to the design of the system that allowed coins that are not held in exchange to be deposited by users. Regulators have not ruled out the possibility that other faulty distributions may be exposed.
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Separately, the financial authorities have reportedly formed an emergency response team in collaboration with the Digital Asset eXchange Alliance (DAXA), a self-regulatory organization that represents domestic exchange.
The team has begun testing asset verification and internal control systems on four other platforms – Upbit, Coinone, Korbit, and GOPAX. Any shortcomings are expected to be included in DAXA’s self-regulation guidelines and may impact the next phase of cryptocurrency legislation in South Korea.
At the time of writing, Bitcoin was trading at $67,763, marking a 2% decline over the past seven days and showing little change since Thursday’s trading session.
Featured image from OpenArt, chart from TradingView.com
