South Korea has launched a full probe into Bithumb and the broader industry after the exchange mistakenly sent over $40 billion worth of Bitcoin to customers last Friday. 

According to CryptoQuant, the exchange, the second-largest in South Korea, held about 46,000 BTC just before the incident. Based on regulatory filings, most of these were customer funds, while the exchange owned less than 200 BTC as of Q3 2025. 

On Friday, however, the exchange sent 620,000 BTC by mistake as customer rewards – Nearly 13-14x more than its reported holdings. 

Swift regulatory response to rein in exchanges

Needless to say, Bithumb’s ‘ghost Bitcoin’ mistake has raised more questions than answers. 

For regulators, this was more than a mistake. That is why this incident turned an escalation of the Bithumb probe into an industry-wide audit.  

According to the financial sector watchdog Financial Supervisory Service (FSS), on-site inspections have been initiated and formal investigations will follow if legal violations are established. 

In a press conference on Monday, FSS Governor Lee Chan-jin said, 

“It was nothing more than erroneously entered virtual data, yet it ended up being traded. That is the essence of the issue. The transaction was actually executed.”

Initially, the exchange was to send 2,00 won or $1.37 as rewards, totalling $423. Instead, it ended up sending over $40 billion in Bitcoin. Some users cashed out the BTC rewards, but over 90% of the funds were recovered, according to Bithumb. 

The exchange apologized for the mistake and promised changes to enhance its internal control systems. 

“We have reported it to all relevant authorities and are fully cooperating with the ongoing Financial Supervisory Service inspection. We will use systems and processes to prevent human error from becoming an accident.”

Meanwhile, regulators said the probe’s findings will be used to further strengthen regulation in the sector. The FSS Governor added, 

“If we cannot properly resolve the ghost coin issue, how can (the virtual asset market) be incorporated into the system? The inspection results have been reflected in the tasks that need to be strongly supplemented in the second phase of legislation.”

Investors reactions to ‘ghost Bitcoin’ error

Following the incident, over 4,100 BTC were moved off the exchange on Friday – A ecord high since early 2025. Over the same period, Bithumb’s overall reserves declined sharply from 46.7K BTC to 41.7K BTC – A 10% decline.  

In the past few days, however, the outflows have dropped to below 500 BTC on a daily average. This seemed illustrative of measured investor behavior, despite the ongoing probe. 

Final Thoughts

• South Korea has launched a probe into Bithumb’s ‘ghost Bitcoin’ and plans to extend the audit into the broader crypto industry.
• According to the officials, the findings will help inform the second phase of legislation for the sector.  

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Author: Benjamin Njiri