South Korea’s financial regulators have come under fire for missing critical failures at Bithumb, which resulted in a staggering Bitcoin transaction error.

Bithumb’s CEO, Lee Jae-won, has admitted to prior mistakes following the mishap that saw 620,000 BTC mistakenly credited to users. The incident revealed significant vulnerabilities in the exchange’s financial controls.

Despite multiple inspections by the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS), a loophole allowed one employee to initiate massive unapparent coin transfers.

Details of the Bitcoin Incident

As detailed by Rep. Kang Min-guk, the FSC inspected Bithumb just once in 2022 and twice in 2025, while the FSS conducted its inspections three times during the corresponding timeframe. Yet, astonishingly, none of these reviews uncovered the discrepancies between the actual assets and their accounting records.

On February 6, an erroneous promotion led to users being allotted 2,000 BTC each instead of receiving funds worth 2,000 won (around $1.38). This blunder resulted in the system misreporting a distribution total of 620,000 bitcoins, far exceeding Bithumb’s actual reserve of around 42,800 BTC.

Lawmakers, including Rep. Han Chang-min, criticized the oversight efforts, suggesting they were merely procedural. The FSS has extended its investigation into potential violations including investor protections and money laundering amidst concerns over systemic flaws.

Bithumb’s CEO also acknowledged two minor prior errors that were rectified and are under the purview of the FSS for review.

Repercussions

This incident comes hot on the heels of another setback for South Korean authorities, where they reported the recovery of missing Bitcoin valued at 40 billion won that had gone missing post-seizure in a criminal investigation. The 320.8 bitcoins were returned following negotiations with a hacker who acquired the funds.

An emergency task force is now meeting to evaluate asset verification processes and operational controls across major exchanges in South Korea, with implications for regulatory measures moving forward.