Yeliz Akmaca 
South Korea’s financial watchdog has opened a full-scale investigation into local crypto exchange Bithumb after nearly $43 billion worth of Bitcoin was mistakenly distributed to users. What began as a routine review quickly escalated as regulators grasped the true scale of the incident.
According to Yonhap, the Financial Supervisory Service (FSS) decided Tuesday to convert its preliminary inspection into a comprehensive probe. An FSS official said the agency is treating the matter “with utmost seriousness,” warning that any behavior disrupting market order would be met with strict measures.
At the center of the investigation is a troubling question: how was Bithumb able to allocate Bitcoin far exceeding its actual reserves?
How 620,000 BTC Was Sent
The incident occurred on February 6. During a promotional campaign, Bithumb mistakenly credited a total of 620,000 BTC to hundreds of user accounts — roughly $43.1 billion at current prices.
The error reportedly stemmed from a staff member entering BTC instead of KRW (Korean won) as the reward unit.
On the surface, it looks like a classic “fat finger” mistake. In practice, the fallout was anything but small.
Bithumb later announced it had recovered 99.7% of the wrongly distributed Bitcoin. Of the 1,788 BTC sold by users, 93% has been reclaimed. Still, around 125 BTC remains unrecovered.
During the turmoil, the BTC/KRW trading pair on Bithumb briefly plunged about 15%.
The exchange said it would compensate affected users at 110% of their losses and pledged to strengthen internal controls. It also plans to establish a 100 billion won ($68 million) user protection fund to cover unexpected incidents.
The Bigger Issue: The System Allowed It
Criticism has not subsided.
Because this was not merely a data-entry error.
Blockchain data indicates Bithumb held only about 46,000 BTC at the time — yet its internal systems were capable of generating and executing transactions totaling 620,000 BTC. In other words, balances were created for Bitcoin that effectively did not exist.
That exposed serious weaknesses in reserve verification, risk controls, and internal ledger management.
Several analysts warned that such a setup could trigger a full-blown market breakdown under a bank-run scenario.
Political Backlash Builds
The fallout quickly spilled into South Korea’s political arena.
Na Kyung-won, a lawmaker from the opposition People Power Party, said the incident went far beyond a simple mistake:
“If an exchange can operate by shifting numbers on an internal ledger without actual on-chain backing, it means they may be selling Bitcoin they don’t even own. That’s how systemic collapse begins.”
Party spokesperson Choi Bo-yoon added that the operational competence of domestic digital asset exchanges has already reached a “failing grade.”
The ruling Democratic Party echoed similar concerns, pointing to “critical loopholes” in exchanges’ internal control and accounting systems.
In response, lawmakers revived plans to impose a 15%–20% cap on individual ownership stakes in crypto exchanges — a proposal previously resisted by the industry.
Financial authorities are also reportedly discussing tougher regulations that would place crypto platforms under legal obligations comparable to traditional financial institutions.
A Critical Moment for South Korea’s Crypto Framework
Local media note that the Bithumb incident could undermine public trust just as South Korea prepares the Digital Asset Basic Act, the country’s second comprehensive crypto regulatory framework.
Bithumb may have recovered most of the funds. Users will be compensated.
But the core question remains:
Is this infrastructure truly ready to operate at financial-system scale?
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