Crypto: South Korean Authorities Under Fire Over $43b Bithumb Bitcoin Error

Lawmakers criticize South Korea’s Financial Services Commission after Bithumb mistakenly credited 620,000 BTC and the probe faces delays.

South Korean lawmakers are stepping up pressure on financial regulators after crypto exchange Bithumb mistakenly credited customers with Bitcoin it did not hold, an error that briefly sparked a rush to sell and renewed questions about oversight of the country’s fast-growing digital-asset market.

Lawmakers said the Financial Services Commission (FSC) failed to detect critical flaws in Bithumb’s internal systems despite at least three inspections since 2022, The Korea Times reported Thursday.

Representative Kang Min-guk of the main opposition People Power Party said the incident was more than a technical mishap, claiming structural weaknesses in the crypto market, including gaps in regulation and oversight.

Bithumb mistakenly credited 2,000 Bitcoin (BTC) per user instead of 2,000 Korean won ($1.40) during a promotional event on Feb. 6, distributing a total of 620,000 BTC that the exchange did not actually hold.

Lawmakers’ criticism of the FSC intensified as the regulator delayed its inspection of Bithumb. The authority opened the investigation on Feb. 10, with FSC officials emphasizing they would take “stern legal actions against acts that harm the market order.”

The probe, initially expected to conclude Feb. 13, has been extended, with officials aiming to complete it by the end of February, citing a need for additional review, multiple local publications reported.

The FSC’s inspection of Bithumb reportedly covers not only the recent 620,000 BTC error, but also two similar incidents in the past.

“There were two previous cases in which coins were mistakenly paid out and later recovered, but the amounts were minimal,” Bithumb CEO Lee Jae-won said during an emergency National Assembly session on Feb. 11.

In the latest incident, Bithumb said it managed to recover the majority of miscredited assets, with only 125 BTC ($8.6 million) out of the non-existent 620,000 BTC unrecovered.

Source: CoinTelegraph