The Financial Supervisory Service (FSS) of South Korea has escalated its routine inspection of the Bithumb exchange to a full-scale investigation. This follows an incident involving the erroneous distribution of 620,000 BTC (approximately $43.1 billion) to users, as reported by Yonhap.
A representative from the regulator stated that the agency will take strict measures against any actions that undermine market order.
The error occurred on February 6 during a promotional event when an employee mistakenly entered Bitcoin as the reward unit instead of Korean won.
The amount distributed far exceeded the actual reserves of the exchange, which held only about 46,000 BTC at the time of the incident.
Following the incident, the Bitcoin price against the won on the platform plummeted by 15%.
Bithumb representatives reported that they have recovered 99.7% of the mistakenly distributed assets, with approximately 125 BTC remaining unrecoverable.
The company has promised to compensate affected clients for their losses at 110% and to strengthen its internal control systems. Additionally, Bithumb will establish a user protection fund amounting to 100 billion won ($68 million).
Political Ramifications
The incident has drawn sharp criticism from lawmakers. Representative Na Kyun Won noted that the situation has exposed issues related to trading "non-existent assets."
“If an exchange simply changes numbers in its internal registry without any actual movement of funds on the blockchain, it means they are selling Bitcoin they do not own. This situation poses a risk of market collapse,” she stated.
The ruling Democratic Party of South Korea announced plans to limit the share of individual shareholders in crypto exchanges to 15-20%. The industry has previously opposed this initiative, fearing it could slow market growth.
Financial authorities are also discussing the introduction of legal responsibilities for crypto platforms similar to those required of traditional financial institutions.
It is worth noting that in 2024, the former CEO of Bithumb's parent company, Bithumb Holdings, Ahn Sung-hyun, was convicted of fraud. In 2025, law enforcement continued investigations into former platform director Kim Dae-sik.