South Korea’s monetary watchdog has opened an investigation into Bithumb after the alternate mistakenly credited lots of of 1000’s of Bitcoin to consumer accounts that it didn’t really maintain.
The Monetary Supervisory Service (FSS) has launched a probe into Bithumb for alleged platform violations across the inaccurate crediting of billions of {dollars} in non-existent Bitcoin (BTC) to consumer accounts, Yonhap Information reported Tuesday.
Bithumb acknowledged the incident on Saturday, saying the platform “incorrectly paid” 620,000 BTC ($42.8 billion) to customers throughout a promotional occasion.
Whereas the alternate recovered a lot of the miscredited BTC, round 125 BTC ($8.6 million) stays unsettled, elevating questions on operational dangers at centralized exchanges (CEXs) and fueling group considerations over “paper Bitcoin.”
Authorities level to a number of alleged violations by Bithumb
Though Bithumb mentioned the incident didn’t lead to any loss or harm to buyer belongings, South Korea’s monetary authorities have flagged its potential implications for the broader market.
“We’re taking this case very critically,” an FSS official reportedly mentioned, including: “The FSS will take stern authorized actions in opposition to acts that hurt the market order.”
The regulator highlighted Bithumb’s alleged violations, together with mismatches between crypto held in its wallets and quantities credited to consumer accounts.
The FSS additionally cited deficiencies in Bithumb’s inside controls, noting that the error stemmed from a single level of failure — one workers member was reportedly accountable for the wrong BTC crediting.
“Paper Bitcoin” considerations intensify
“The 620,000 BTC weren’t ‘actual’ Bitcoin,” CryptoQuant analyst Maartunn advised Cointelegraph, including that the credited BTC existed purely in a digital kind and had been seen solely inside Bithumb’s inside programs.
The alternate’s promotional occasion, which was meant to reward customers with 2,000 South Korean gained ($1.4), resulted in 2,000 BTC per consumer as a result of an worker mistakenly coming into “BTC” because the forex unit as an alternative of “gained,” he mentioned.
“To place in into perspective, Bithumb presently holds round 41,798 BTC in reserves, far lower than the digital 620,000 BTC that shortly existed on its books,” Maartunn mentioned, including that some customers did profit from the incident:
“Round that point, 3,875 BTC, or round $268 million, had been withdrawn from the alternate. This will likely partly mirror customers who managed to withdraw the mistakenly credited BTC, nevertheless it may additionally point out a broader lack of confidence amongst different customers.”
The figures reported by Bithumb are subsequently decrease than what the on-chain information suggests, Maartunn mentioned.
Cointelegraph approached the FSS and Bithumb for remark relating to the reported investigation, however had not acquired a response by publication.
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Bithumb’s information provides to rising group considerations over “paper Bitcoin,” or Bitcoin that doesn’t exist on the blockchain however is traded on CEXs or inventory exchanges within the type of merchandise like derivatives and exchange-traded funds.
Some even instructed that paper Bitcoin buying and selling has contributed to the continuing market turmoil, with Bitcoin shedding round 43% of its worth since October 2025.
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