Financial watchdog plans massive probes into Bithumb after 'ghost' bitcoin fiasco

Financial Supervisory Service (FSS) Gov. Lee Chan-jin speaks during a press briefing on the watchdog’s 2026 business plan at the FSS headquarters in Seoul, Monday. Yonhap

The Financial Supervisory Service (FSS) will launch targeted probes into high-risk areas that could significantly disrupt order in the virtual asset market following the recent bitcoin payment mishap at Bithumb, FSS Gov. Lee Chan-jin said Monday.

Lee said the incident exposed structural weaknesses in virtual asset information systems, underscoring the need for corrective measures.

Financial authorities have already set up an emergency task force to examine not only Bithumb but other virtual asset exchanges as well, focusing on management practices, operational conditions and internal control frameworks.

Lee also vowed to support the country’s second phase of virtual asset legislation, under which exchanges could be required to adopt internal control standards comparable to those imposed on traditional financial institutions.

“We will carry out planned investigations into major high-risk areas in the virtual asset market where unfair trading practices, such as market manipulation and the dissemination of false information, are a concern,” Lee said during a press briefing on the watchdog’s 2026 business plan.

The remarks came amid growing concerns over the system stability of virtual asset exchanges after Bithumb mistakenly distributed 620,000 bitcoins instead of 620,000 won ($423) to 249 winners of its “random box” promotion on Friday. The error happened because the payout unit was incorrectly entered as “BTC” instead of “won.”

Launched in 2024, the promotion allows users to open a virtual box for cash rewards ranging from 2,000 won to 50,000 won.

Although the country’s second-largest crypto exchange moved to prevent trading and withdrawals from the affected accounts once the error was identified, 1,788 bitcoins had already been sold by 86 users, according to financial authorities.

Bithumb has since recovered most of the sold assets in the form of won or other cryptocurrencies. However, as of 4:30 a.m. Saturday, 125 bitcoins with a market value of about 13 billion won remained unrecovered, including about 3 billion won that had already been transferred to users’ bank accounts.

Bithumb's investor protection center in Gangnam District, Seoul, Monday / Yonhap

The FSS is currently conducting an on-site review of Bithumb to determine the precise cause of the error, assess the exchange’s management and safeguarding of customer assets, and evaluate whether its IT infrastructure and internal control systems are sufficient to prevent a recurrence.

“If the inspection uncovers any signs of legal breaches, we will promptly escalate the review to a formal investigation and impose strict measures in line with applicable laws, should violations be confirmed,” Lee said.

Lee stressed that the incident laid bare fundamental flaws in virtual asset information systems that fall outside the current regulatory framework, highlighting the need for stronger institutional safeguards.

He added that unresolved weaknesses in internal controls and IT systems could eventually translate into licensing risks for exchanges. He noted that the FSS will seek to reflect the findings from the Bithumb inspection in the second phase of virtual asset legislation to strengthen related provisions.

Meanwhile, a legal confrontation between Bithumb and some of its customers appears unavoidable, as about 13 billion won worth of bitcoins has yet to be recovered and some recipients may refuse to return the assets.

“We are reaching out to users who liquidated the mistakenly distributed bitcoins, seeking to secure repayment through voluntary cooperation on a case-by-case basis,” a Bithumb official said.

Market participants note that the incident closely resembles a mistaken transfer, suggesting that recovery could be pursued through civil lawsuits seeking restitution of unjust gains.

Given that the random box promotion clearly indicated individual rewards of between 2,000 won and 50,000 won, recipients of the unusually large payouts could reasonably have been aware that the funds were not rightfully theirs.

Lee also reiterated that the mistakenly credited bitcoins fall squarely under unjust enrichment that must be returned, emphasizing that restitution should be made in the original form of the asset.

He also warned that users who liquidated the misallocated coins are now in what he called a “catastrophic position,” noting that the subsequent rise in bitcoin prices could force them to incur significant extra expenses to repurchase and return the coins.

Nevertheless, opinions remain divided over whether the case could give rise to criminal charges against those users.

In a December 2021 ruling, the Supreme Court acquitted a defendant who transferred bitcoin worth about 1.4 billion won to another account following an erroneous transfer.

At the time, the court ruled that virtual assets are not recognized as legal tender under the law and therefore cannot automatically be treated in the same manner as state-issued currency for the purposes of criminal protection.