$1.3 billion error exposes weaknesses in financial oversight

Bithumb’s CEO has acknowledged past mistakes following the recent 620,000 BTC debacle and urged further investigation into system flaws.

South Korean financial authorities are facing criticism for failing to discover a major flaw in Bithumb’s system that caused an unprecedented Bitcoin error.

Despite repeated inspections by the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS), a vulnerability remained that allowed a single employee to trigger large amounts of coin transfers without being detected.

Bithumb cryptocurrency accident

According to Kang Min-guk, a lawmaker from the People’s Power Party, the FSC inspected Bithumb once in 2022 and twice in 2025, and the FSS conducted three inspections during the same period. Nevertheless, no one identified any discrepancies between actual holdings and accounting records.

On February 6th, a promotional event failed in which users were mistakenly given 2,000 BTC instead of coins worth 2,000 won (approximately $1.38). Due to this error, the system recorded that a total of 620,000 Bitcoins had been “distributed” to users, which was much higher than the exchange’s actual holdings of approximately 42,800 BTC.

As reported by The Korea Times, the country’s lawmakers said the mistake exposed serious weaknesses in internal controls, bookkeeping and regulatory oversight. Social Democratic Party lawmaker Han Chang-min questioned whether the regulator’s inspection was largely a procedural matter and said it was an attempt to shift the blame onto Bithumb.

The FSS has extended its investigation into February and is investigating possible violations related to investor protection, anti-money laundering (AML) and system deficiencies.

Bithumb CEO Lee Jaewon confirmed that two previous minor errors have been resolved, and FSS will also look into them.

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Meanwhile, the authorities and an emergency team from the Digital Asset eXchange Alliance (DAXA) are investigating the asset verification and internal controls of other prominent exchanges in the country, including Upbit, Coinone, Korbit, and GOPAX. This outcome is expected to impact both DAXA’s self-regulatory rules and future virtual currency laws.

lost item

The setback comes a month after the Gwangju District Public Prosecutors Office reported that bitcoins seized in a criminal case were missing, but authorities have now recovered all 40 billion won worth of missing virtual currency. Prosecutors said the 320.8 bitcoins were apparently voluntarily returned from the hacker’s electronic wallet to the office’s wallet on February 17 because the hacker was unable to cash them out.

The coins were originally confiscated from the daughter of a couple who were arrested on suspicion of operating an illegal overseas gambling site worth 390 billion won from 2018 to 2021 and converting criminal proceeds into Bitcoin. Officials said the bitcoins were lost last August when prosecutors accidentally visited a phishing site while inspecting wallets and the funds were compromised.

Authorities are tracking the hackers and monitoring domestic and international exchanges to prevent further losses.