$1.3B Mistake Causes Investigation into Weak Financial Oversight

Bithumb’s CEO acknowledged past mistakes following the recent 620,000 BTC error that prompted further investigation into system errors.

South Korean financial authorities are facing criticism after failing to spot major flaws in Bithumb’s systems that led to an unprecedented Bitcoin crash.

Despite repeated inspections by the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS), risks still exist that allow a single employee to initiate large cash transfers without detection.

Bithumb Crypto Mishap

According to Rep. Kang Min-guk of the People Power Party, the FSC reviewed Bithumb once in 2022 and twice in 2025, while the FSS conducted three inspections at the same time. Apart from this, there are no identified discrepancies between the retained earnings and the accounting records.

On February 6, a promotional event went awry when users were mistakenly paid 2,000 BTC each instead of 2,000 won coins (worth about $1.38). This error caused the system to register a total of 620,000 bitcoins “distributed” to users, which is much more than the actual exchange holding of about 42,800 BTC.

As reported by the Korea Times, the country’s lawmakers said the error exposed deep weaknesses in internal controls, ledger management, and legal oversight. Representative Han Chang-min of the Social Democratic Party questioned whether the regulator’s review was due process and noted efforts to place responsibility on Bithumb.

The FSS extended its investigation in February and is investigating potential violations including investor protection, anti-money laundering (AML), and system errors.

Bithumb CEO Lee Jae-won acknowledged the two previous minor errors found, which the FSS will review.

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Meanwhile, an emergency team from the authorities and the Digital Asset eXchange Alliance (DAXA) is reviewing the asset verification and internal control of some of the country’s most prominent exchanges, such as Upbit, Coinone, Korbit, and GOPAX. The results are expected to influence DAXA’s self-regulation and future crypto regulations.

Lost and Found

The latest setback comes a month after the Gwangju District Prosecutor’s Office reported that Bitcoin seized in a criminal case was missing, but authorities have now recovered all of the missing 40 billion cryptocurrency. Prosecutors say 320.8 bitcoins were returned to the electronic hacker’s office wallet on February 17, apparently voluntarily, after the hacker was unable to withdraw them.

The coins were taken from the daughter of a couple arrested for operating an illegal gambling site worth 390 billion between 2018 and 2021, who converted their criminal proceeds into Bitcoin. Officials said the BTC went missing last August when prosecutors accidentally entered the scene of a phishing attack while searching the wallet, which revealed the funds.

Authorities have been tracking the hacker and monitoring domestic and international exchanges to prevent further losses.