Bithumb’s ‘60 Trillion Won Bitcoin’ Misallocation Incident... Authorities and Industry Scramble to Prevent Recurrence [Crypto Briefing]

[Financial News] A major virtual asset exchange, Bithumb, mistakenly credited users with Bitcoin (BTC) worth about 60 trillion won due to a data entry error, exposing the crypto industry’s weak internal controls and the limits of its book-entry trading systems. The financial authorities have labeled the incident a grave example of risks in the virtual asset market coming to light and have begun work on institutional reforms, including codifying operators’ ‘strict liability’ for such accidents. Bithumb, for its part, has moved to restore trust by creating a 100 billion won customer protection fund and compensating affected users at 110% of their realized loss on sales.
According to the financial authorities and the virtual asset industry on the 8th, around 7 p.m. on the 6th Bithumb mistakenly credited 695 event participants with 2,000 BTC each (about 197 billion won at the time), instead of 2,000 won per person (up to 50,000 won). The total amount misallocated came to roughly 620,000 BTC, which translates to more than 60 trillion won at the prices prevailing when the incident occurred.
Controversy has grown over the fact that about 620,000 BTC were credited in the system even though Bithumb’s actual Bitcoin holdings are only around 40,000 to 50,000 BTC. Analysts say this was possible because trades on domestic won-based virtual asset exchanges (the KRW market) and other centralized exchanges (CEXs) are processed as book entries using only the exchange’s internal database, or off-chain records, rather than on the blockchain network on-chain. In other words, the incident confirmed that large-scale asset movements can occur purely through changes to internal database figures, regardless of the exchange’s real holdings, making internal control mechanisms a central concern. A ruling-party official on the National Policy Committee of the National Assembly stated, “Following the Upbit hacking case and now Bithumb’s misallocation incident, discussions will be held at the parliamentary level,” adding, “We will also review governance reforms, including the current debate over ownership-dispersion standards for exchanges.”
The Financial Services Commission (FSC) also convened an emergency review meeting the previous day, chaired by FSC vice chair Kwon Dae-young, to coordinate its response. An emergency task force comprising the FSC, the Financial Intelligence Unit (FIU), the Financial Supervisory Service (FSS), and the Digital Asset eXchange Alliance (DAXA) plans to begin with an on-site inspection of Bithumb and then conduct a full-scale review of the virtual asset holdings and operations of major exchanges such as Upbit.
In particular, the authorities have decided to significantly strengthen operators’ responsibilities in the process of enacting the second-phase legislation of the General Act on Digital Assets. They plan to introduce a strict liability provision under which operators must compensate users for losses from system failures and similar incidents regardless of fault, and to mandate regular external audits of asset holdings.
Bithumb, which has been working to contain the fallout, announced that as of 10:42 p.m. the previous day it had fully recovered 100% of the misallocated Bitcoin. A Bithumb representative explained, “We immediately recovered 99.7% of the misallocated Bitcoin on the day of the incident, and for the remaining 0.3% (1,788 BTC) that had already been sold, we used the company’s own assets to restore 100% asset integrity.”
Bithumb also unveiled compensation measures aimed at rebuilding trust. Customers who panic-sold at low prices during the period of the incident, when the market price plunged, will receive 110% of the difference between their sale price and the reference price. All users who were logged in during that time will be given compensation worth 20,000 won. In addition, Bithumb will waive trading fees for all customers for one week.
To prevent a recurrence, Bithumb plans to permanently operate a 100 billion won customer protection fund, make multi-step approval processes mandatory, and run its artificial intelligence (AI)-based abnormal transaction detection system, Safe Guard, around the clock.
The legal community has stressed that the Bithumb Bitcoin misallocation should serve as a turning point for bringing exchanges’ internal control standards up to the level of financial institutions and overhauling their operational risk management systems. It has also advised the financial authorities to focus less on ex post regulation and sanctions, and more on establishing internal control guidelines that can genuinely underpin market confidence. A representative at a major law firm commented, “Exchanges now wield influence comparable to that of regulated financial institutions, so they cannot avoid the corresponding social responsibilities,” adding, “The fact that centralized exchanges still lack robust ‘kill switches’ or multi-layer verification systems in their internal infrastructure to immediately block large-scale abnormal trades is an area that must be improved going forward.”

elikim@fnnews.com Kim Mi-hee Reporter