Crypto: South Korea Probes Bithumb After $43b ‘phantom’ Bitcoin Payout

South Korean authorities launched an investigation into Bithumb after it mistakenly credited 620,000 BTC to users, adding to concerns about “paper Bitcoin” and internal controls.

South Korea’s financial watchdog opened an investigation into Bithumb after the exchange mistakenly credited hundreds of thousands of Bitcoin that it did not actually hold to user accounts.

The Financial Supervisory Service (FSS) launched a probe into Bithumb for alleged platform violations around the erroneous crediting of billions of dollars in non-existent Bitcoin (BTC) to user accounts, Yonhap News reported Tuesday.

Bithumb acknowledged the incident on Saturday, saying the platform “incorrectly paid” 620,000 BTC ($42.8 billion) to users during a promotional event.

While the exchange recovered most of the miscredited BTC, about 125 BTC ($8.6 million) remains unsettled, raising questions about operational risks at centralized exchanges (CEXs) and fueling community concerns over “paper Bitcoin.”

Although Bithumb said the incident did not result in any loss or damage to customer assets, South Korea’s financial authorities have flagged its potential implications for the broader market.

“We are taking this case very seriously,” an FSS official reportedly said, adding: “The FSS will take stern legal actions against acts that harm the market order.”

The regulator highlighted Bithumb’s alleged violations, including mismatches between crypto held in its wallets and amounts credited to user accounts.

The FSS also cited deficiencies in Bithumb’s internal controls, noting that the error stemmed from a single point of failure — one staff member was reportedly responsible for the incorrect BTC crediting.

“The 620,000 BTC were not ‘real’ Bitcoin,” CryptoQuant analyst Maartunn told Cointelegraph, adding that the credited BTC existed purely in a virtual form and were visible only within Bithumb’s internal systems.

Source: CoinTelegraph