Bithumb Bitcoin Blunder: $1.3 Billion Error Leads to Investigation into Weak Financial Supervision

Bithumb’s CEO admitted past mistakes after the latest 620,000 BTC blunder, which has sparked further investigation into system errors.

South Korea’s financial authorities have been criticized for failing to detect major flaws in Bithumb’s systems that led to 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 make mass currency transfers unnoticed.

Bithumb Crypto Accident

According to People Power Party Rep. Kang Min-guk, the FSC reviewed Bithumb once in 2022 and twice in 2025, while the FSS conducted three inspections during the same period. Despite this, no one has identified discrepancies between actual assets and accounting data.

On February 6, a promotional event went wrong when users were incorrectly credited with 2,000 BTC each instead of 2,000 won coins (worth about $1.38). This error caused the system to record a total of 620,000 bitcoins that were “distributed” to users, which is much more than the exchange’s actual amount of approximately 42,800 BTC.

This was reported by The Korea Times, the country’s lawmakers said the flaw exposes deeper weaknesses in internal controls, general ledger management and regulatory oversight. Social Democratic Party Representative Han Chang-min questioned whether the regulators’ inspections were largely procedural, noting that there have been attempts to pin responsibility on Bithumb.

The FSS has extended its investigation through February and is investigating possible violations of investor protection, anti-money laundering (AML) and system failures.

Bithumb CEO Lee Jae-won acknowledged two smaller previous errors that had been fixed, which the FSS will also review.

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Meanwhile, an emergency team from authorities and the Digital Asset eXchange Alliance (DAXA) is assessing asset verification and internal controls at some of the country’s other prominent exchanges such as Upbit, Coinone, Korbit and GOPAX. The results are expected to influence both DAXA’s self-regulatory rules and future crypto legislation.

Lost and found

The latest setback comes a month after the Gwangju District Public Prosecutor’s Office reported that Bitcoin seized in a criminal case had disappeared, but authorities have now recovered all 40 billion won in lost cryptocurrency. Prosecutors said the 320.8 bitcoins were apparently voluntarily returned from the hacker’s electronic wallet to the office’s wallet on February 17, after the hacker failed to cash them out.

The coins were originally seized from the daughter of a couple arrested between 2018 and 2021 for operating an illegal foreign gambling site worth 390 billion won, and who had converted their criminal proceeds into Bitcoin. Officials said the BTC was lost last August when prosecutors accidentally visited a phishing site while checking the wallet, exposing the funds.

Authorities tracked the hacker and monitored domestic and international exchanges to prevent further losses.