South Korean lawmakers are intensifying pressure on financial regulators following a monumental system failure at Bithumb, the nation's largest cryptocurrency exchange. The incident, which occurred on February 6, led to the accidental distribution of over $43 billion worth of Bitcoin (BTC), triggering widespread political backlash and calls for heightened accountability within the virtual asset market.
A Glaring Oversight: Bithumb's Costly Error
The heart of the issue lies in a critical system flaw at Bithumb, where, astonishingly, users were mistakenly credited with 2,000 Bitcoin instead of Bitcoin worth approximately 2,000 Korean won ($1.38). This staggering error resulted in 620,000 Bitcoin being incorrectly disbursed, sparking outrage and exposing severe weaknesses in the exchange's internal controls. Lawmakers like Rep. Kang Min-guk of the People Power Party have sharply criticized the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) for their apparent complacency, highlighting that the agencies conducted multiple inspections between 2022 and 2025 yet failed to detect such a profound structural vulnerability. Rep. Han Chang-min further accused regulators of deflecting responsibility onto Bithumb, despite their explicit supervisory mandate.
Broadening Investigation and Regulatory Reform
In response to the scandal, the FSS has extended its formal investigation deadline and deployed an eight-member inspection team to delve deeper into Bithumb's operations. The investigation is scrutinizing potential violations related to investor protection and anti-money laundering (AML) compliance, with a particular focus on the system architecture that permitted the crediting of coins not physically held by the exchange. This probe extends beyond Bithumb, encompassing four other major domestic crypto platforms: Upbit, Coinone, Korbit, and GOPAX. The findings from these comprehensive reviews are anticipated to significantly shape the self-regulatory guidelines of the Digital Asset eXchange Alliance (DAXA) and influence the next wave of cryptocurrency legislation in South Korea, aiming to fortify the integrity and security of the virtual asset market.
