The Financial Supervisory Service has initiated formal sanction proceedings against South Korean crypto exchange Bithumb by sending an inspection report regarding its early 2026 system error, where Bithumb mistakenly distributed 620,000 Bitcoins—far exceeding its actual 42,000 Bitcoin reserves. Regulators are investigating potential violations of the Virtual Asset User Protection Act. Meanwhile, Bithumb is negotiating a one-year real-name account partnership extension with KB Kookmin Bank.
Bithumb Bitcoin overpayment incident
- ▪The 620,000 Bitcoins mistakenly paid out by Bithumb significantly exceeded the exchange's actual holdings of approximately 42,000 Bitcoins.
- ▪In early 2026, the virtual asset exchange Bithumb mistakenly paid out approximately 620,000 Bitcoins due to a system error.
Financial regulator inspection report
- ▪The Financial Supervisory Service determined that Bithumb's Bitcoin overpayment incident was caused by structural defects in its overall transaction and ledger management systems.
- ▪The Financial Supervisory Service sent an inspection report containing findings, legal grounds, and expected sanction levels to Bithumb regarding the Bitcoin overpayment incident.
Sanctions process underway
- ▪The final sanctions against Bithumb are expected to be confirmed around the end of 2026, as the Sanction Review Committee enters a recess in August 2026.
- ▪The Financial Supervisory Service will finalize Bithumb's sanction level after receiving Bithumb's explanation, issuing a prior notice, and holding a Sanction Review Committee deliberation.
Virtual Asset Protection Law violations
- ▪The Financial Supervisory Service is reviewing whether Bithumb violated the Virtual Asset User Protection Act, which requires operators to maintain identical quantities of virtual assets as deposited.
- ▪The Virtual Asset User Protection Act mandates that virtual asset business operators must separate company-owned virtual assets from user-owned virtual assets.
KB Kookmin Bank partnership renewal
- ▪Bithumb and KB Kookmin Bank are pursuing a one-year extension of their real-name deposit and withdrawal account partnership agreement, which is set to expire on August 24, 2026.
- ▪In February 2026, KB Kookmin Bank and Bithumb signed an unusual short-term six-month contract to monitor regulatory inspection results and internal control improvements following Bithumb's Bitcoin overpayment incident.
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