Bithumb’s $43 Billion Bitcoin Error Sparks Political Backlash in South Korea

South Korean lawmakers are ramping up pressure on financial regulators following a major system failure at Bithumb, the country’s largest cryptocurrency exchange. The glitch reportedly led to the unintended distribution of more than $43 billion worth of Bitcoin (BTC) earlier this month.

The February 6 incident has triggered significant political scrutiny, targeting both the exchange and the agencies responsible for overseeing South Korea’s virtual asset market.

According to local reports, members of the National Assembly are questioning how such a large-scale operational failure could occur despite multiple regulatory inspections.

Rep. Kang Min-guk of the main opposition People Power Party disclosed that the Financial Services Commission (FSC) reviewed Bithumb three times between 2022 and 2025. During the same period, the Financial Supervisory Service (FSS) conducted three separate inspections.

Despite these reviews, regulators failed to identify what has now been described as a critical structural weakness within the exchange’s internal systems.

Kang argued that oversight mechanisms were inadequate, stressing that proper safeguards should have prevented a scenario in which a single employee could initiate massive coin transfers. He described the episode as more than a technical mishap, saying it exposes deeper structural weaknesses in the virtual asset market — including regulatory complacency and gaps in supervision.


Scale of the Distribution Error


Instead of crediting users with 2,000 won (approximately $1.38), the system mistakenly credited 2,000 Bitcoin per user. In total, around 620,000 Bitcoin were incorrectly distributed.

Rep. Han Chang-min of the minor Social Democratic Party also criticized regulators, questioning whether supervisory authorities had meaningfully evaluated the exchange’s internal systems. He suggested that regulators appeared to shift responsibility onto Bithumb despite their own oversight obligations.


Broader Crypto Oversight and Regulatory Response


In response to the incident, the Financial Supervisory Service extended the deadline for its formal investigation from February 13 to the end of the month, citing the need for additional review time.

An eight-member inspection team has intensified its investigation, focusing on potential violations related to investor protection and anti-money laundering (AML) compliance.

Particular attention is being given to the system architecture that allowed digital assets not actually held by the exchange to be credited to users. Regulators have not ruled out the possibility that further erroneous distributions could be uncovered as the probe continues.

Separately, financial authorities have reportedly formed an emergency response team in coordination with the Digital Asset eXchange Alliance (DAXA), a self-regulatory body representing domestic exchanges.

The team has begun inspections of asset verification and internal control systems at four other platforms — Upbit, Coinone, Korbit, and GOPAX. Any identified deficiencies are expected to be incorporated into DAXA’s self-regulatory guidelines and could influence the next phase of cryptocurrency legislation in South Korea.




Market Reaction


At the time of reporting, Bitcoin was trading at $67,763, reflecting a 2% decline over the past seven days and showing limited movement since Thursday’s session.