South Korean authorities under fire over $43B Bithumb Bitcoin error

CoinTelegraph

by Helen Partz

February 20, 2026

AI-Generated Deep Dive Summary

South Korean lawmakers are intensifying their criticism of the country’s financial regulators following a significant error at cryptocurrency exchange Bithumb. The incident occurred when Bithumb mistakenly credited customers with Bitcoin it did not actually hold, leading to a brief but chaotic rush to sell the incorrectly issued assets. This oversight has raised serious questions about the effectiveness of South Korea’s regulatory framework for its rapidly expanding digital-asset market. The Financial Services Commission (FSC), which oversees the country’s financial sector, faces scrutiny after failing to identify critical flaws in Bithumb’s internal systems during at least three inspections conducted since 2022. Representative Kang Min-guk of the opposition People Power Party has argued that this incident is not merely a technical glitch but reflects deeper structural weaknesses in South Korea’s cryptocurrency market. Kang pointed out gaps in regulation and oversight as key issues, suggesting that the FSC’s current approach is insufficient to manage the risks posed by crypto exchanges. The Bithumb error briefly caused panic among customers, who rushed to sell the erroneously credited Bitcoin, leading to a temporary market downturn. While no financial losses were reported due to the system-wide correction of the mistake, the incident has highlighted vulnerabilities in the operational and regulatory frameworks of South Korea’s crypto exchanges. Lawmakers are now demanding accountability from the FSC,

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Originally published on CoinTelegraph on 2/20/2026