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>>Bithumb's Bitcoin Mistake: A $1.3 Billion Error Triggers Investigation Into Inadequate Financial Oversight

Bithumb's Bitcoin Mistake: A $1.3 Billion Error Triggers Investigation Into Inadequate Financial Oversight

crypthub

about 3 hours ago

Regulatory Failures in Bithumb Incident

South Korea’s financial regulators faced scrutiny after failing to detect vulnerabilities in Bithumb’s systems that caused a $1.3 billion Bitcoin error. Repeated inspections by the Financial Services Commission (FSC) and Financial Supervisory Service (FSS) between 2022 and 2025 did not uncover discrepancies in accounting records. A single employee exploited a flaw to trigger unauthorized transfers, leading to a system-wide error where 620,000 BTC were erroneously distributed to users. Lawmakers criticized the oversight, highlighting weaknesses in internal controls and regulatory procedures.

Ongoing Investigations and Accountability

The FSS is probing potential violations, including investor protection and anti-money laundering (AML) lapses, while reviewing prior errors admitted by Bithumb CEO Lee Jae-won. An emergency team from authorities and the Digital Asset eXchange Alliance (DAXA) is auditing other major exchanges like Upbit and Coinone. Findings may shape DAXA’s self-regulatory rules and future crypto legislation. Lawmakers questioned whether inspections were procedural and whether Bithumb was unfairly blamed for systemic flaws.

Recovery of Lost Cryptocurrency

Authorities recovered 320.8 BTC worth 40 billion won after prosecutors traced missing funds from a criminal case to a hacker’s wallet. The coins were voluntarily returned in February following an accidental phishing incident in August. Officials continue tracking the hacker and monitoring exchanges to prevent further losses. This recovery follows the Bithumb blunder, underscoring ongoing challenges in securing digital assets and regulatory enforcement.