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Financial watchdog moves to fully investigate Bithumb after Bitcoin mishap

Published: 10 Feb. 2026, 16:50

The Bithumb logo is seen in Seoul. [NEWS1]

Financial regulators have escalated their response to Bithumb's massive erroneous Bitcoin payout worth 62 trillion won ($43 billion), shifting from an on-site inspection to a full formal investigation. Authorities described the case as “a serious matter that could undermine market order.”

The Financial Supervisory Service (FSS) notified Bithumb in advance on Monday that it would launch a formal investigation, which it did on Tuesday, according to financial authorities that same day. The news comes less than a week after the watchdog began an on-site inspection on Saturday, the day after the incident. The FSS plans to significantly expand the scope of the probe by deploying additional personnel.

The central issue revolves around how Bitcoin payouts far exceeded the exchange's actual holdings. As of the third quarter of last year, Bithumb held about 42,000 Bitcoin, of which only 175 were owned by the company. The rest were users' assets. Bithumb's current Bitcoin holdings are estimated to have increased to roughly 46,000 Bitcoin.

However, regulators determined that about 620,000 Bitcoin — roughly 13 to 14 times that amount — were paid out in the incident. The FSS is closely examining how such a large-scale erroneous payout could occur under the ledger-based operating structure typical of centralized exchanges.

Suspicions have emerged that the cryptocurrency operator may have violated the Act on the Protection of Virtual Asset Users, which requires service providers to hold the same type and quantity of virtual assets entrusted to them by users.

“This case could shake people’s trust in the entire virtual asset market,” said a financial source. “[The FSS] will inspect whether the 620,000 erroneously paid coins were structured in a way that allowed them to be withdrawn all at once.”

A pedestrian passes by the Bithumb Lounge in Gangnam District, southern Seoul, on Feb. 9. [YONHAP]

Authorities also plan to scrutinize Bithumb's internal control systems to find whether the company's approval structure allowed a staff member to easily enable coin payouts, as well as whether monitoring systems — designed to continuously cross-check ledger balances against actual holdings — were functioning properly.

Financial authorities intend to actively use the inspection findings for the second phase of virtual asset legislation.

“If the 'phantom coin' issue is not resolved, it will be difficult to incorporate the virtual asset market into the institutional system,” said FSS Gov. Lee Chan-jin during a press briefing on Monday. “We will derive strong supplementary measures based on the inspection results.”

This “phantom coin” vulnerability stems from the operational structure of many virtual asset exchanges. Customer assets are often held in internal wallets, and transactions are processed through internal ledgers rather than being immediately recorded on public blockchains. While this approach reduces costs associated with frequent transactions, the incident revealed that nonexistent or “phantom” assets can effectively be created and circulated within the system.

The incident may serve as a turning point in the ongoing discussion to limit majority shareholders' stakes in cryptocurrency exchanges between 15 and 20 percent.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM DA-YOUNG [[email protected]]