Bithumb blunder puts South Korean regulator FSC under heavy pressure

The promotional campaign by crypto exchange Bithumb, in which 620,000 Bitcoin was paid out to users due to a system error, is getting a political tail.

Now that the incident has exposed the vulnerability of internal systems, the South Korean financial regulator FSC in particular has come under fire. Investors and parliamentarians wonder how such an error could happen at an exchange that has already been inspected several times.

Political pressure increases after system failure

The Financial Services Commission (FSC) indicated on February 10 that it had launched an official investigation into the affairs of Bithumb. The regulator promised “strict legal action” against actions that disrupt market order. Initially, this investigation was to be completed on February 13, but due to additional checks, the completion has been postponed to the end of the month.

In the meantime, the pressure on the supervisor is increasing. Parliamentarians express strong criticism, not only of the crypto exchange itself, but especially of the lack of effective supervision. Research by The Korea Times shows that the FSC has conducted at least three inspections at Bithumb since 2022, without finding any major shortcomings.

According to Kang Min-guk, deputy of the ruling People Power Party, this incident shows that there are structural weaknesses in the supervision of crypto platforms. “This goes beyond a technical error. There is a broader systemic crisis,” Kang said.

Previous security problems fuel distrust

The timing of the incident is especially sensitive because the South Korean government was already under pressure over previous security issues involving digital assets. For example, in 2021, 22 Bitcoin disappeared from a cold wallet at a police station in Seoul. In August 2025, another 320 Bitcoin were lost at the Public Prosecution Service in Gwangju, probably due to a leaked password. Both cases have now been resolved, but they have seriously damaged confidence in the security of government agencies.

The fact that it now appears that fundamental mistakes are also being made at crypto exchanges puts the FSC’s supervision in an even sharper light.

Call for supervisory reform

The Bithumb incident marks a new low for the South Korean crypto sector, which is considered world-leading. Investors, policymakers and experts are calling for faster reforms and more effective control mechanisms to prevent recurrence.

The outcome of the FSC investigation will determine possible sanctions against Bithumb and future regulations. In the meantime, confidence in both the crypto exchanges and the regulator itself has been seriously damaged. What started as an innocent promotion has turned into a national test of digital asset oversight in South Korea.