South Korea’s Regulators Face Backlash Over $43B Bithumb Bitcoin Error
Highlights:
- South Korean lawmakers pressure regulators for failing to spot Bithumb system weaknesses.
- This comes after a Bithumb mistakenly credited users with massive Bitcoin totals during a promotion event.
- Bithumb recovers most funds, but oversight concerns continue to grow.
South Korea’s digital asset sector is facing renewed political pressure after a major accounting failure at Bithumb exposed serious oversight gaps. Politicians are now inquiring about the role of financial regulators in the wake of a system glitch on the part of the crypto exchange, which gave its users Bitcoin that it did not have.
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The exchange, during a promotional event on Feb. 6, mistakenly credited users with 2,000 Bitcoins per account instead of 2,000 Korean won, which is valued at $1.40. This mistake caused the exchange to give out 620,000 Bitcoins that never existed in the first place. The news of the mistake spread quickly among the users who attempted to sell the assets they received. The mistake also caught the attention of lawmakers who claimed the regulators failed to identify the weaknesses in the internal controls.
South Korea's FSC under fire as Bithumb credited 620k BTC it didn't hold, sparking a rush to sell and new questions on custody. Regulators say stern actions are coming, but scrutiny remains. Is this a market wake-up call or growing pains for crypto oversight? What are your takes?…
— Notivo (@notivonews) February 20, 2026
FSC Faces Backlash After 3 Inspections Miss Bithumb System Flaws
According to The Korea Times, the Financial Services Commission had conducted at least three inspections of Bithumb since 2022. Despite these inspections, it was not able to identify critical flaws in the systems of operation. Rep. Kang Min-guk from the People Power Party said the case was not simply a technical mistake. He added that deeper structural problems still exist in the crypto market.
The Financial Services Commission opened a formal investigation on Feb. 10. Officials said they would take “stern legal actions against acts that harm the market order.” Regulators first planned to finish the probe by Feb. 13. Later, they extended the deadline and now expect to wrap up the review by the end of February. The commission said they need more time to examine the case carefully.
Due to this delay, the National Assembly criticizes the company. Lawmakers argue that the slow process increases uncertainty and weakens public trust in agencies responsible for supervising the fast-growing digital asset market.
Bithumb said it managed to retrieve nearly all of the Bitcoin that was wrongly credited. From the 620,000 BTC issued by mistake during the promotion, only 125 BTC are still missing. Although the fast recovery reduced the financial impact but the episode has hurt the exchange’s reputation.
Bithumb’s Bitcoin Incident Raises Oversight Concerns in South Korea’s Crypto Market
South Korea remains one of the most active crypto markets in Asia. Rapid growth has brought innovation, but also operational risks. Recent events have placed focus on accountability, inspection quality, and protection of investor interests. Final findings from the Financial Services Commission investigation are expected before the end of the month. Market participants await clarity as political scrutiny continues to rise.
As more similar instances emerge, the authorities are getting ready to take further steps. The Financial Supervisory Service in South Korea is planning to announce new rules this year. As reported by the local media, the agency plans to enhance its regulation in the virtual asset market, combat financial crimes, and improve the regulation of technology-related risks in the financial system.
According to Yonhap, Korea's FSS announced its 2026 plan on Feb 9: investigations into high-risk crypto manipulations (whale, containment/ramp schemes, API orders, SNS misinformation) with AI text/surge detection tools; new Digital Asset Basic Act group for phase-2 legislation…
— Wu Blockchain (@WuBlockchain) February 9, 2026
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Syed Ali Haider
Ali Haider is a contributing crypto writer at Crypto2Community. He is a crypto and blockchain journalist with over six years of experience and has long advocated for digital freedom and cybersecurity. Haider has been featured in several high-profile crypto and finance outlets, including Coincult, AltcoinBeacon, BTCRead, and more.
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