FSC, FSS criticized for missing Bithumb system flaw in 'ghost coin' case
Prices of cryptocurrencies are displayed at Bithumb Lounge in Gangnam District, Seoul, Feb. 9. Yonhap
Financial authorities are facing intensified scrutiny over their role in the recent erroneous bitcoin payout incident at Bithumb, after failing to detect critical flaws in the exchange’s internal systems, which were cited as a key cause of the case, lawmakers said Thursday.
Data provided by Rep. Kang Min-guk of the main opposition People Power Party showed that the Financial Services Commission reviewed the exchange three times, once in 2022 and twice in 2025, while the Financial Supervisory Service (FSS) conducted three inspections of their own over the same period.
Despite the repeated supervision, authorities failed to identify a key vulnerability — a system structure prone to input errors — that was blamed for the incident.
Kang said that existing safeguards were insufficient to prevent a scenario in which a single employee could trigger large-scale coin transfers, and discrepancies between actual holdings and accounting records went undetected.
“The episode is not merely a technical mishap but a case that lays bare deeper structural weaknesses in the virtual asset market, including complacent supervision and gaps in regulation,” Kang said.
On Feb. 6, Bithumb mistakenly credited 2,000 bitcoins per user instead of bitcoins worth 2,000 won (about $1.38) during a promotional event, resulting in 620,000 bitcoins being wrongly distributed.
The figure far exceeded the exchange’s reported holdings of approximately 42,800 bitcoins as of the third quarter last year, raising concerns that the incident exposed structural flaws in internal controls and ledger management beyond a simple input mistake.
Rep. Han Chang-min of the minor Social Democratic Party also questioned whether regulators had carried out largely procedural inspections.
“Authorities appeared to be shifting responsibility onto Bithumb despite their supervisory role,” Han said.
Bithumb CEO Lee Jae-won, right, speaks during an emergency inquiry at the National Assembly in Seoul, Feb. 11, over the massive bitcoin misallocation incident. From left are Financial Services Commission Vice Chairman Kwon Dae-young, Financial Supervisory Service Governor Lee Chan-jin and Bithumb CEO Lee. Yonhap
Meanwhile, the FSS has extended the deadline for its formal probe into Bithumb from Feb. 13 to the end of the month, citing the need for additional time.
The watchdog’s eight-member inspection team is intensifying scrutiny of potential violations related to investor protection and anti-money laundering compliance, with particular focus on the system design that allowed coins not actually held by the exchange to be credited.
Authorities have not ruled out the possibility that further erroneous payouts could be uncovered, which could deepen concerns over weak internal controls.
Appearing before the National Assembly on Feb. 11, Bithumb CEO Lee Jae-won said two minor past incidents of mistaken coin distributions had occurred and were later recovered.
An FSS official said that previous cases would also be reviewed as part of the probe.
Separately, an emergency response team led by the financial authorities and the Digital Asset eXchange Alliance (DAXA) has been inspecting asset verification and internal control systems at four other exchanges — Upbit, Coinone, Korbit and GOPAX.
Any shortcomings identified are expected to be reflected in DAXA’s self-regulatory framework and the next phase of crypto legislation.