The South Korean government is facing intense criticism following a major error at crypto exchange Bithumb, which mistakenly credited users with 620,000 Bitcoin (BTC) worth approximately $43 billion. The incident, which occurred during a promotional event on February 6, has raised serious questions about the oversight and regulation of the country’s rapidly growing digital asset market.
Lawmakers Question FSC’s Oversight
Representatives from the main opposition People Power Party have called out the Financial Services Commission (FSC) for failing to detect critical flaws in Bithumb’s internal systems, despite at least three inspections since 2022. Representative Kang Min-guk emphasized that the issue goes beyond a simple technical glitch, highlighting structural weaknesses in the crypto market, including regulatory gaps and oversight failures.
Delayed FSC Investigation Fuels Criticism
The FSC’s delayed investigation into Bithumb has further fueled criticism. The regulator began its probe on February 10, promising to take “stern legal actions against acts that harm the market order.” However, the investigation, initially expected to conclude last Friday, has been extended until the end of February, citing the need for additional review.
Bithumb CEO Addresses Past Incidents
Bithumb CEO Lee Jae-won, during an emergency National Assembly session on February 11, acknowledged two previous incidents where coins were mistakenly paid out and later recovered. “The amounts were minimal in those cases,” Lee stated, but the latest incident has left 125 BTC ($8.6 million) unrecovered, raising concerns about the exchange’s security and reliability.
Broader Concerns Over Crypto Regulation
The Bithumb incident is part of a broader pattern of regulatory and security issues in South Korea’s crypto sector. In 2021, 22 BTC worth around $1.5 million at current prices disappeared from a cold wallet at Seoul’s Gangnam Police Station during a nationwide audit. Another case in August 2025 saw 320 BTC vanish from the Gwangju District Prosecutors’ Office, only to be recovered after the hacker returned the funds. These incidents underscore the persistent weaknesses in authorities’ oversight and custody of digital assets.
Looking Forward: Strengthening Oversight
As South Korea continues to navigate the complex landscape of digital assets, experts and lawmakers are calling for more robust regulatory frameworks and enhanced oversight. The Bithumb incident and similar cases highlight the urgent need for stringent security measures and transparent regulatory practices to restore public confidence in the crypto market. The government’s response to these challenges will be crucial in shaping the future of the digital asset industry in South Korea.
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