South Korea is investigating how cryptocurrency exchange Bithumb initiated an exchange of $40 billion in Bitcoin that it apparently did not have.
The Seoul exchange started crediting customer accounts on February 6 with the digital currency rather than the 2,000 won ($1.37) per person authorised for a promotional campaign. The incident reportedly stemmed from an employee inputting the payout as Bitcoin rather than won.
In the 20 minutes it took to recognise the mistake, 620,000 “ghost Bitcoin” ($40 billion) – rather than 620,000 won ($423) – appeared across the balances of hundreds of customer accounts, according to Bithumb.
South Korea's Financial Supervisory Service said it was looking into the incident and had initiated on-site inspections, with a formal investigation to be initiated if legal violations are found.
“It was nothing more than erroneously entered virtual data, yet it ended up being traded,” FSS governor Lee Chan-jin said at a press conference on Monday. “That is the essence of the issue: the transaction was actually executed.”
Some customers immediately tried to sell the assets immediately, resulting in the sale of 1,788 Bitcoin. None of the tokens appeared to leave Bithumb, according to the exchange, but payouts were made. Bithumb said it had recovered 93 per cent of the value of those sales by Saturday in either won or other tokens.
The company added it had reconciled the remaining outstanding Bitcoin using its own assets.
Bitcoin imbalance
The transfer orders of magnitude larger than what should have been possible happened because of a quirk in how centralised exchanges operate.
In the third quarter of 2025, Bithumb held just 175 Bitcoin on its balance sheet, while custodian holdings for clients totalled 42,619 Bitcoin, according to a regulatory filing.
Those balances, though, are tracked on an internal ledger instead of directly on the blockchain. Trades are initiated by updating the internal records first, while on-chain settlement comes later.
This makes trading fast, but it opens the door to big mistakes if internal book-keeping does not match an exchange’s actual holdings.
“The so-called ghost Bitcoin incident clearly revealed that, beyond a mere input error, there are structural weaknesses in internal controls and ledger management systems of cryptocurrency exchanges,” Kim Jiho, a spokesperson for the ruling Democratic Party, said on Saturday.
“This is an issue that cannot be taken lightly.”
Bithumb said it is taking corrective measures to tighten oversight of transfers, including a multilevel approval process for distributing awards.
“We will supplement previously missing processes to ensure that approvals are carried out in two or more stages, thereby preventing incidents,” the company said.
Regulatory redress
The response to the mistake has been swift. Regulators convened two emergency meetings over the weekend. DAXA, an alliance of South Korean cryptocurrency exchanges, announced that it would conduct a review of internal controls across all exchanges.
Authorities are also pursuing new legislative measures requiring exchanges to establish internal controls similar to those for traditional financial institutions.
“The incident has exposed fundamental weaknesses in the virtual asset information system, specifically, regulatory blind spots that existed in virtual asset legislation,” the FSS’s Mr Lee said. “This has identified a task that must be strongly reinforced in the second legislature phase of virtual assets.”
Bithumb is South Korea’s second-largest exchange by trading volume, according to CoinGecko. The incident occurred during a particularly volatile week in cryptocurrency that saw Bitcoin fall to nearly $60,000, less than half its October peak above $126,000, before rebounding to roughly $70,000 by Monday.
