Bithumb $43 Billion Bitcoin Blunder Triggers Political Backlash In South Korea

South Korean lawmakers are ramping up pressure on financial regulators after a system failure at Bithumb, the country’s largest cryptocurrency exchange, led to the accidental distribution of more than $43 billion worth of Bitcoin (BTC) earlier this month.

The February 6 incident has triggered political scrutiny of both the exchange itself and the agencies responsible for overseeing the virtual asset market. 

Rep. Kang Min-guk of the main opposition People Power Party disclosed that the country’s Financial Services Commission (FSC) reviewed Bithumb three times between 2022 and 2025. 

Kang argued that existing oversight mechanisms were inadequate. He pointed out that safeguards were insufficient to prevent a situation in which a single employee could initiate massive coin transfers. Kang said:

The episode is not merely a technical mishap but a case that lays bare deeper structural weaknesses in the virtual asset market, including complacent supervision and gaps in regulation.

Rep. Han Chang-min of the minor Social Democratic Party also criticized regulators, questioning whether supervisory authorities had meaningfully evaluated the exchange’s internal systems. “Authorities appeared to be shifting responsibility onto Bithumb despite their supervisory role,” Han said.

In response to the incident, the FSS extended the deadline for its formal investigation from Feb. 13 to the end of the month, citing the need for additional time. 

Particular attention is being given to the system architecture that allowed coins not actually held by the exchange to be credited to users. Regulators have not ruled out the possibility that further erroneous distributions could be uncovered.

The team has begun inspections of asset verification and internal control systems at four other platforms — Upbit, Coinone, Korbit, and GOPAX. Any deficiencies are expected to be incorporated into DAXA’s self-regulatory guidelines and could influence the next phase of cryptocurrency legislation in South Korea.

At the time of writing, Bitcoin was trading at $67,763, marking a 2% decline over the past seven days and showing minimal change since Thursday’s trading session. 

Featured image from OpenArt, chart from TradingView.com