South Korea probes Bithumb after $43B ‘phantom’ Bitcoin payout

South Korea’s fiscal watchdog has opened an probe into Bithumb aft the speech mistakenly credited hundreds of thousands of Bitcoin to idiosyncratic accounts that it did not really hold.

The Financial Supervisory Service (FSS) has launched a probe into Bithumb for alleged level violations astir the erroneous crediting of billions of dollars successful non-existent Bitcoin (BTC) to idiosyncratic accounts, Yonhap News reported Tuesday.

Bithumb acknowledged the incident connected Saturday, saying the level “incorrectly paid” 620,000 BTC ($42.8 billion) to users during a promotional event.

While the speech recovered astir of the miscredited BTC, astir 125 BTC ($8.6 million) remains unsettled, raising questions astir operational risks astatine centralized exchanges (CEXs) and fueling assemblage concerns implicit “paper Bitcoin.”

Authorities constituent to aggregate alleged violations by Bithumb

Although Bithumb said the incidental did not effect successful immoderate nonaccomplishment oregon harm to lawsuit assets, South Korea’s fiscal authorities person flagged its imaginable implications for the broader market.

“We are taking this lawsuit precise seriously,” an FSS authoritative reportedly said, adding: “The FSS volition instrumentality stern ineligible actions against acts that harm the marketplace order.”

Bithumb confirmed “incorrect payment” of 620,000 BTC connected Saturday. Source: Bithumb

The regulator highlighted Bithumb’s alleged violations, including mismatches betwixt crypto held successful its wallets and amounts credited to idiosyncratic accounts.

The FSS besides cited deficiencies successful Bithumb’s interior controls, noting that the mistake stemmed from a azygous constituent of nonaccomplishment — 1 unit subordinate was reportedly liable for the incorrect BTC crediting.

“Paper Bitcoin” concerns intensify

“The 620,000 BTC were not ‘real’ Bitcoin,” CryptoQuant expert Maartunn told Cointelegraph, adding that the credited BTC existed purely successful a virtual signifier and were disposable lone wrong Bithumb’s interior systems.

The exchange’s promotional event, which was intended to reward users with 2,000 South Korean won ($1.4), resulted successful 2,000 BTC per idiosyncratic owed to an worker mistakenly entering “BTC” arsenic the currency portion alternatively of “won,” helium said.

“To enactment successful into perspective, Bithumb presently holds astir 41,798 BTC successful reserves, acold little than the virtual 620,000 BTC that soon existed connected its books,” Maartunn said, adding that immoderate users did payment from the incident:

“Around that time, 3,875 BTC, oregon astir $268 million, were withdrawn from the exchange. This whitethorn partially bespeak users who managed to retreat the mistakenly credited BTC, but it could besides bespeak a broader nonaccomplishment of assurance among different users.”

The figures reported by Bithumb are truthful little than what the on-chain information suggests, Maartunn said.

Cointelegraph approached the FSS and Bithumb for remark regarding the reported investigation, but had not received a effect by publication.

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Bithumb’s quality adds to growing assemblage concerns implicit “paper Bitcoin,” oregon Bitcoin that does not beryllium connected the blockchain but is traded connected CEXs oregon banal exchanges successful the signifier of products similar derivatives and exchange-traded funds.

Some adjacent suggested that insubstantial Bitcoin trading has contributed to the ongoing marketplace turmoil, with Bitcoin losing astir 43% of its worth since October 2025.

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