South Korean Lawmakers Press Regulators After Bithumb Incident

South Korean lawmakers are increasing their scrutiny of financial regulators following a system glitch at Bithumb, the nation’s largest cryptocurrency exchange, which unintentionally distributed over $43 billion in Bitcoin earlier this month.

The incident, which occurred on February 6, has drawn significant political attention to both Bithumb and the oversight agencies tasked with regulating the cryptocurrency market.

Inside Bithumb’s Major Bitcoin Error

A report by the Korea Times highlights lawmakers’ concerns over how such a considerable error could occur, even with multiple regulator inspections. Kang Min-guk, a member of the opposition People’s Power Party, disclosed that South Korea’s Financial Services Commission (FSC) conducted three reviews of Bithumb between 2022 and 2025.

During the same timeframe, the Financial Supervisory Service (FSS) also carried out three inspections. Yet, regulators overlooked noteworthy structural vulnerabilities within the exchange’s system.

Kang criticized the current oversight mechanisms, suggesting they are insufficient. He emphasized the risks associated with allowing a single employee to initiate large coin transfers, stating:

This situation isn’t merely an operational error; it reveals deeper issues in the cryptocurrency market—like lax oversight and regulatory shortcomings.

Instead of granting users 2,000 won (around $1.38) worth of Bitcoin, the system erroneously credited them with 2,000 Bitcoin each, resulting in a total misallocation of 620,000 Bitcoins.

Han Chang-min from the Minority Social Democratic Party also questioned the effectiveness of regulatory evaluations of Bithumb’s internal systems, pointing out, “The authorities seem to be deflecting blame onto Bithumb, despite their supervisory role.”

Broader Oversight in Cryptocurrency

In light of this incident, the Financial Supervisory Board has pushed back the deadline for its formal investigation from February 13 to the end of the month, citing the need for more time.

An inspection team, consisting of eight members, is deepening its inquiry, concentrating on potential violations related to investor protection and anti-money laundering (AML) protocols.

They are particularly interested in the system architecture that allows users to deposit coins that the exchange does not actually possess. Regulators haven’t dismissed the possibility of further allocation mistakes occurring.

Additionally, financial authorities are said to have established an emergency response unit in collaboration with the Digital Asset Exchange Alliance (DAXA), a self-regulatory consortium of cryptocurrency exchanges in the country.

This team is examining asset verification and internal control systems across four other platforms: Upbit, Coinone, Korbit, and GOPAX. Any shortcomings found will likely be included in DAXA’s self-regulatory guidelines, which could influence future legislation concerning virtual currencies in South Korea.

As of now, Bitcoin is trading at $67,763, down 2% over the past week, with little change from Thursday’s session.