Introduction: A “Self-Destructing” Second-Largest Korean Exchange
In the first 40 episodes, we dug into a series of exchanges ranging from HashKey to XT.com. Today, in Episode 41, were looking at a “self-destructing player” — Bithumb.
On paper, Bithumb‘s resume in the Korean market looks like a textbook example of a “top-tier compliant platform”: founded in 2014, South Korea’s second-largest crypto exchange, approximately 22.3% market share, a VASP-licensed exchange approved by the Financial Intelligence Unit (FIU), a real-name banking partnership with KB Kookmin Bank, and even a previous plan for an IPO.
Sounds like the perfect profile of a leading regulated Korean exchange, right？
But on the other side of the story:
On February 6, 2026, Bithumb accidentally distributed 620,000 BTC to 695 users due to an employee operational error — a mistake involving more than $40 billion worth of Bitcoin, about 15 times the amount of BTC actually held by the platform.
Bithumb CEO Lee Jae-won admitted during a parliamentary hearing that the companys “internal control system had serious deficiencies.” The FIU accused Bithumb of approximately 6.65 million regulatory violations, imposed a fine of 36.8 billion Korean won (around $27 million), and issued a six-month “partial business suspension” sanction.
In the first half of 2026, Bithumb recorded a net loss of 108.7 billion Korean won, while revenue nearly halved. WikiBit gave it a score of 7.56/10, while Trustpilot and FX110 were filled with complaints involving “withdrawal failures” and “pig-butchering scams.”
So how could a licensed exchange make a mistake like “accidentally sending 620,000 BTC” — something that even a beginner would struggle to imagine？
Today, we are going to break it down layer by layer.
1. Regulatory Compliance: FIU License, but 6.65 Million Violations + 36.8 Billion Won Fine
License: The “Entry Barrier” for Korean Won Trading Exchanges
Bithumb holds a VASP (Virtual Asset Service Provider) license issued by South Koreas Financial Intelligence Unit (FIU), making it one of the few exchanges legally permitted to operate Korean won fiat trading pairs.
Under South Koreas Act on Reporting and Using Specified Financial Transaction Information, virtual asset exchanges operating KRW markets must obtain real-name deposit and withdrawal accounts from banks.
Bithumbs partnership with KB Kookmin Bank was approved for renewal by the FIU in September 2026, extending cooperation until September 2027.
The value of this license is extremely high in South Korea.
South Korea is one of the strictest jurisdictions in the world when it comes to crypto exchange regulation. FIU approval means Bithumb has passed comprehensive reviews covering anti-money laundering (AML), customer identification procedures (KYC), and financial stability requirements.
However:
Having a license does not automatically mean being compliant.
FIU Sanctions: 6.65 Million Violations and a 36.8 Billion Won Fine
In March 2026, the FIU imposed a six-month “partial business suspension” sanction and a 36.8 billion won (approximately $27 million) fine on Bithumb.
The reason:
Bithumb allegedly violated South Koreas Specific Financial Information Act, involving approximately 6.65 million cases of regulatory violations, including failures to properly verify customers and transactions with unregistered virtual asset operators.
6.65 million violations.
This is not a “minor operational mistake.”
This is a sign of systemic internal control failure.
The positive development is that on April 30, 2026, the Seoul Administrative Court suspended enforcement of the sanction until a final judgment is issued.
During the legal proceedings, Bithumb can continue normal operations.
However, suspension of enforcement does not mean Bithumb has been cleared.
It is only a procedural delay. The final ruling has not yet been made.
The “Ghost Ledger” of $68 Billion
On February 6, 2026, during a promotional campaign, Bithumb was supposed to distribute Bitcoin worth 2,000 Korean won (approximately $1.38) per user.
Instead, due to an internal error, it sent each of 695 users 2,000 BTC.
Total amount:
Approximately 620,000 BTC
Estimated value:
More than $40 billion
This amount was around 15 times Bithumbs actual Bitcoin holdings, which were approximately 42,619 BTC.
How outrageous was this mistake？
620,000 BTC represents approximately 2.95% of Bitcoins total supply.
A single employee entering the wrong number in an exchange system almost “created” nearly 3% of all Bitcoin in circulation out of nowhere.
During a parliamentary hearing, CEO Lee Jae-won admitted:
“We deeply recognize the deficiencies in our internal control system.”
He further explained that Bithumbs policy required transfer amounts to be checked against actual holdings, but this mechanism completely failed.
The transfer amount was also not isolated in a separate account.
Even more concerning:
South Korean lawmakers pointed out that Bithumb had only classified assets separately on its internal ledger, but had not implemented actual on-chain segregation.
This means Bithumbs “customer asset separation” may have existed only as accounting entries rather than verifiable blockchain-based custody.
Other Regulatory Investigations
Besides the FIU investigation, Bithumb also faced scrutiny from South Koreas Financial Supervisory Service (FSS) regarding withdrawal delays.
The exchange was also subject to a police raid in 2023 over alleged fraud-related accusations.
Risk Rating: High Risk
The FIU license is Bithumbs strongest compliance advantage.
But:
6.65 million violations
36.8 billion won penalty
accidental transfer of 620,000 BTC
ledger-based separation instead of on-chain segregation
Together paint a picture of:
“A licensed exchange with inadequate internal controls.”
Bithumb is not an unlicensed operation.
It is an exchange that has a license but struggles to control itself.
2. Account Security and Withdrawals: 13-Hour Withdrawal Delay, FSS Investigation
August 2026: 13-Hour Withdrawal Delay, FSS Launches Investigation
On August 10, 2026, a Bithumb user requested a withdrawal of an altcoin.
The withdrawal was not processed until 3:25 PM the following day — a delay of more than 13 hours.
After waiting four hours, the user contacted customer support.
The response:
“The current balance is insufficient.”
Customer service advised the user to wait until internal funds were replenished before withdrawing.
However, Bithumb later denied that the issue was caused by insufficient reserves.
This was not an isolated incident.
A report from Digital Times indicated that similar withdrawal delays had occurred repeatedly in the past, raising concerns about possible liquidity issues or operational shortcomings.
Bithumb explained the delay as being caused by:
“The time required to transfer assets from cold wallets to hot wallets.”
However, the FSS launched an investigation to determine whether Bithumb violated South Koreas Electronic Financial Transactions Act.
This law requires exchanges to process withdrawals promptly and maintain sufficient reserves to meet customer demands.
If negligence is confirmed, Bithumb could face administrative penalties or even criminal charges.
February 2026: All Withdrawals Suspended After 620,000 BTC Error
During the 620,000 BTC incident, Bithumb suspended trading and withdrawals within 35 minutes.
The exchange recovered 99.7% of the mistakenly distributed Bitcoin.
However, approximately 1,786 BTC had already been sold during the few minutes before affected accounts were frozen.
A platforms internal controls were able to react within 35 minutes after discovering the problem.
But those same controls completely failed to prevent the transfer of 620,000 BTC in the first place.
This shows:
Bithumbs risk management system appears better at defending against external threats than preventing internal operational failures.
Chinese Users “Pig-Butchering Scam” Complaints
There are multiple complaints about “Bithumb” on FX110.
However, it is important to note:
Many of these complaints likely do not involve the official Korean exchange Bithumb.
Instead, they appear to involve scam platforms impersonating the Bithumb brand.
One complaint was titled:
“Pig-butchering scam Bithumb: The group is full of fake users, withdrawals impossible!”
The user claimed:
“A platform where money only goes in but never comes out. The scammers promised withdrawals around January 15 and compensation if they failed. The group chat was full of fake supporters.”
Another complaint directly stated:
“It was operated by a domestic team.”
This is not necessarily evidence that Bithumb itself committed fraud.
However, Bithumbs brand has clearly become a target for large-scale impersonation.
Ordinary users often cannot distinguish between the real Bithumb and fake platforms.
When victims lose money, they blame the Bithumb name.
This is similar to the brand impersonation problems faced by exchanges such as Echobit and GXT.
Risk Rating: Medium-High Risk
13-hour withdrawal delays + FSS investigation + customer service responses mentioning “insufficient balance” + widespread brand impersonation issues.
Bithumbs withdrawal problems do not necessarily indicate that the platform is intentionally withholding user funds.
Instead, they point toward:
Operational capabilities struggling to keep up with the scale of the platform.
But for users, the outcome is the same:
Your money may become difficult to withdraw when problems occur.
3. Reserve Transparency: No Complete PoR, Only 42,619 BTC Actually Held
Key Data: Actual Holdings of 42,619 BTC
Bithumb has not publicly disclosed a detailed BTC reserve amount or provided a complete on-chain Proof of Reserves (PoR) verification.
However, according to South Korean media outlet MK.co.kr, as of the end of Q3 2025, Bithumb stored and custody-managed approximately 42,619 BTC.
42,619 BTC — this is Bithumbs “real reserve.”
Yet the exchange mistakenly distributed 620,000 BTC.
The amount mistakenly sent was 15 times larger than its actual Bitcoin holdings.
South Korean Regulators: Comprehensive Review of PoR Systems
In February 2026, Lee Chang-jin, head of South Koreas Financial Supervisory Service (FSS), ordered a comprehensive review of proof-of-reserve systems used by virtual asset exchanges.
Lee stated:
“Overseas markets have established PoR systems that allow real-time comparison between actual on-chain holdings and accounting records. South Korea has not yet institutionalized this as a mandatory requirement.”
More critically, South Korean lawmaker Kim pointed out:
“Bithumb only classified assets separately on its internal ledger but did not conduct actual on-chain segregation, which is why the incident occurred.”
“Ledger separation without on-chain separation.”
This means Bithumbs “customer asset segregation” may have existed only as an internal database label rather than a verifiable blockchain-based separation mechanism.
If true, Bithumbs user asset security was built on the assumption that:
“The platform will not make mistakes.”
But the February 2026 incident proved that assumption was wrong.
Risk Rating: High Risk
No complete PoR + only 42,619 BTC in actual holdings + “ledger separation rather than on-chain segregation.”
Bithumbs reserve transparency ranks among the weakest levels compared with major global exchanges.
An exchange holding only 42,619 BTC was able to mistakenly distribute 620,000 BTC.
This reveals a huge gap between its:
internal accounting system
and
actual asset management capabilities.
4. Financial Strength: Revenue Halved, Net Loss of 108.7 Billion Won
First Half of 2026: Revenue Collapse and Shift From Profit to Loss
Bithumbs financial performance deteriorated significantly in 2026.
According to its first-half 2026 financial report:
Operating revenue: 168.8 billion Korean won (approximately $125 million), down 48.7% year-on-year
Operating profit: 14.9 billion Korean won, down 83.4% year-on-year
Net loss: 108.7 billion Korean won (approximately $80 million), compared with a net profit of 55 billion Korean won during the same period last year
From a 55 billion won profit to a 108.7 billion won loss.
Within one year, Bithumbs profitability reversed by more than 160 billion Korean won.
Market Share: 22.3%, But the Gap Continues to Widen
According to CoinGecko data, market shares among South Koreas major KRW-based exchanges are:
| Exchange | Market Share |
| Upbit | 72.10% |
| Bithumb | 22.30% |
| Coinone | 4.30% |
| Korbit | 1.00% |
| Gopax | 0.30% |
Although Bithumb remains firmly in second place, the gap with Upbit is massive:
72.1% vs 22.3%
Upbits market share is approximately 3.2 times larger.
After Bithumbs zero-fee promotional campaign ended, the gap between the two platforms widened further.
Stock Price Nearly Halved, IPO Delayed Until After 2028
Bithumbs share price fell from 346,000 Korean won to 172,000 Korean won in 2026.
Within less than six months, the stock price was almost cut in half.
The IPO originally targeted for 2026 has now been postponed until after 2028.
Korean Financial Institutions Closing In: Bithumb Becoming Isolated
South Koreas digital asset industry is undergoing rapid consolidation.
Mirae Asset Group is pushing forward with the acquisition of Korbit.
Korea Investment & Securities is considering investment in Coinone.
Hana Financial Group and Hanwha Investment & Securities are increasing their stakes in Dunamu, the operator of Upbit.
Meanwhile, Bithumb still lacks a clear external strategic partner.
As major competitors increasingly align themselves with securities firms and financial conglomerates, Bithumbs independent strategy is becoming a growing disadvantage in the Korean market.
Risk Rating: High Risk
Revenue halved + 108.7 billion won net loss + stock price collapse + IPO delay + no major external alliance.
Bithumb is not insolvent.
But it is clearly losing financial momentum and bleeding resources.
5. Internal Operations and Management: CEO Admits “Internal Control Deficiencies,” Founder Remains Behind the Scenes
CEO: Lee Jae-won, the Founders Long-Time Associate
Bithumbs CEO is Lee Jae-won.
Born in 1970, Lee graduated from the Department of Industrial Engineering at Inha University and completed an MBA program at the Asian Institute of Management in the Philippines.
He previously worked at:
LG CNS
IGE
Affinitymedia
IMI (formerly Item Mania)
He joined Bithumb in 2017, serving as:
Head of Management Consulting
Global Business Director
He became CEO in 2022.
Lee Jae-won worked with Bithumb founder Lee Jung-hoon as early as their time at IMI.
IMI was also founded by Lee Jung-hoon.
Lee Jae-won is widely regarded as the founders close associate.
Founder: Lee Jung-hoon, the Behind-the-Scenes Controller
Lee Jung-hoon is the founder of Bithumb and former chairman of Bithumb Holdings.
He currently leads Bithumb A, a new business and investment company spun off from Bithumb Korea.
He is widely considered the ultimate controlling figure behind the exchange.
In September 2026, Bithumb Holdings appointed Kim Ki-bum as its new CEO.
Kim previously served as Bithumbs external relations executive and is also considered closely connected to Lee Jung-hoon.
Internal Control Problems: CEO Personally Admitted “Serious Deficiencies”
During the parliamentary hearing regarding the 620,000 BTC incident, CEO Lee Jae-won personally admitted:
“We deeply recognize the deficiencies in our internal control system.”
He explained that Bithumbs policy required transfer amounts to be checked against actual holdings.
However:
the verification mechanism completely failed;
transfer amounts were not isolated in separate accounts.
A CEO publicly admitting before parliament that the exchanges system had “completely failed” is unprecedented in this 41-episode risk investigation series.
Risk Rating: High Risk
CEO is the founders close associate.
The founder continues to control the company behind the scenes.
The new CEO is also considered connected to the founder.
Bithumbs governance structure is highly centralized.
More importantly, the CEOs own admission of “internal control deficiencies” proves that this governance model experienced a major failure in February 2026.
6. Product Experience and Trading Depth: Full Features, But “Unable to Withdraw” Becomes the Core Issue
Product Portfolio
Bithumb provides:
Spot trading
Korean won fiat channels through KB Kookmin Bank real-name accounts
Staking services
API trading
As South Koreas second-largest exchange, Bithumb has strong liquidity in KRW markets, second only to Upbit.
However, the biggest problems are serious.
Fatal Weaknesses
First: Withdrawal Delays Become the Biggest Concern
“13-hour withdrawal delays” + “customer service claiming insufficient balance” + “FSS investigation.”
This is not simply a case of poor individual user experience.
It reflects potential systemic operational shortcomings.
Second: The 620,000 BTC Incident Destroyed User Confidence
Users naturally ask:
“If an employee can mistakenly send 620,000 BTC, are the numbers shown in my account actually reliable？”
The incident severely damaged trust in Bithumbs internal accounting and risk management.
Third: Fake Bithumb Scam Complaints Still Damage the Brand
The “pig-butchering scam” complaints from Chinese users appear to target fake platforms impersonating Bithumb.
However, the damage is still absorbed by the Bithumb brand.
Many ordinary users cannot distinguish between:
the official Korean exchange,
and fake platforms using the same name.
Risk Rating: Medium Risk
Bithumb has:
complete product functions,
strong KRW liquidity,
a large domestic user base.
However:
The combination of:
withdrawal difficulties,
the 620,000 BTC accidental transfer,
and declining user trust
means Bithumbs product experience is increasingly being questioned in two critical areas:
security and reliability.
7. Real Community Feedback: Brand Impersonation and “Pig-Butchering Scam” Complaints Flooding Online
Positive Community Feedback (South Korean Local Community)
Long-term local users generally consider Bithumb one of the most reliable exchanges in South Korea.
Positive opinions include:
Strong spot market liquidity
Smooth KRW deposit and withdrawal channels
Years of continuous operation
No history of the platform disappearing with user funds
As a result, Bithumb still maintains relatively high trust among Korean users.
Negative Community Feedback (Overseas Communities and WikiBit Complaint Section)
Strict Risk Control Policies
Large transactions and unusual login activities can easily trigger account restrictions.
Users complain that:
Account unlocking procedures are complicated
Verification processes are time-consuming
Customer support responses are slow
Weak Localization for Overseas Users
International users report:
Limited Chinese-language support
High communication barriers when problems occur
Difficulties resolving account and withdrawal issues
Controversy Surrounding the Operational Error
Some users whose accounts were frozen after the 620,000 BTC incident argued:
The platform itself made the operational mistake, yet users were the ones whose assets were restricted.
They believe the cost of resolving the issue was unfairly transferred to users.
Risk of Small-Cap Token Delistings
Due to South Koreas strict regulatory environment, Bithumb periodically removes certain cryptocurrencies from its listings.
Users holding affected tokens need to withdraw or transfer assets promptly.
Community Reputation
FX110
Multiple complaints exist regarding “Bithumb.”
However, most complaints appear to involve scam platforms impersonating Bithumb rather than the official Korean exchange.
Trustpilot
The Korean version of Bithumb receives relatively acceptable ratings, while its international ratings are significantly lower.
South Korean Local Communities
Discussions surrounding:
the 620,000 BTC incident
FIU sanctions
internal control failures
have been extremely active.
Negative Reviews Mainly Focus on “Withdrawals” and “Fake Bithumb Platforms”
South Korean users:
Main concerns:
Withdrawal delays
FIU sanctions
620,000 BTC incident
Chinese users:
Most complaints involve being deceived by fake “Bithumb” platforms.
However, the brand name being criticized is still Bithumb itself.
Risk Rating: Medium Risk (Community Level)
8. Comprehensive Exchange Exit Risk Assessment
| Category | Risk Level | Summary |
| Regulatory Compliance | High | FIU licensed, but 6.65 million violations + 36.8 billion won fine + 620,000 BTC accidental transfer + “ledger separation” |
| Account Security / Withdrawals | Medium-High | 13-hour withdrawal delay; FSS investigation; customer service response mentioning “insufficient balance” |
| Reserve Transparency | High | No complete PoR; only 42,619 BTC actually held; ledger separation instead of on-chain segregation |
| Financial Strength | High | Revenue halved; 108.7 billion won net loss; stock price collapse; IPO delayed until after 2028 |
| Team & Operations | High | CEO is founders close associate; founder remains influential behind the scenes; CEO admitted internal control deficiencies |
| Product Experience | Medium | Strong KRW liquidity, but withdrawal delays indicate systemic operational issues |
| Community Feedback | Medium | Brand impersonation; large number of “pig-butchering scam” complaints; relatively positive Korean reputation |
Overall Rating: Medium-High Exchange Exit Risk
Bithumb is the most unique case in this series.
It represents the ultimate contradiction between:
“Licensed compliance” and “internal control collapse.”
Its risk profile is completely different from the “shady offshore exchanges” analyzed in previous episodes.
1. It Has Genuine Regulatory Compliance
Bithumb possesses:
FIU VASP license
Real-name banking partnership with KB Kookmin Bank
Status as South Koreas second-largest exchange
In South Korea, an exchange without proper licensing cannot legally operate KRW markets.
2. But It Has Proven Internal Control Failures
The evidence is substantial:
620,000 BTC accidental transfer
6.65 million regulatory violations
“Ledger separation instead of on-chain segregation”
This is not merely a case of regulatory uncertainty.
It involves:
regulatory penalties,
court proceedings regarding sanctions,
and an FSS investigation.
3. It Is Losing Financial Strength
The signs include:
Revenue cut nearly in half
108.7 billion won net loss
Stock price collapse
IPO postponement
Lack of major external strategic partners
Bithumb is not insolvent.
But it is experiencing chronic financial bleeding.
4. The Main Risk Is Not “Running Away,” But “Operational Collapse”
Unlike platforms such as UZX or Azbit, Bithumb is unlikely to simply disappear with user funds.
Why？
Because it has:
an FIU license,
banking partnerships,
regulatory oversight.
However, users may still face a different type of risk:
“Your money is still in the account, but withdrawals become increasingly difficult, while nobody knows how many internal control vulnerabilities remain.”
This is not a classic “exit scam” risk.
It is the risk of:
a licensed exchanges internal control system gradually breaking down.
9. Recommendations for New and Existing Users
For New Users
1. Enter With Caution
Bithumb is not a “shady exchange.”
It has:
FIU licensing
KB Kookmin Bank partnership
South Koreas second-largest exchange status
However:
6.65 million violations
620,000 BTC accidental transfer
13-hour withdrawal delays
108.7 billion won net loss
These four major issues should not be ignored.
Ask yourself:
Is this a risk you are willing to take？
2. If You Are in South Korea
Bithumb offers KRW liquidity second only to Upbit.
However, users should be mentally prepared for:
possible withdrawal delays
customer service issues
additional verification requirements
3. If You Are Outside South Korea
Avoid using Bithumb unless necessary.
Bithumb primarily serves the Korean market.
International users may experience:
weaker customer support,
more difficult withdrawals,
greater communication barriers.
4. Start With a Small Test
Before depositing significant funds:
Complete the full process:
Deposit → Trade → Withdraw
Only increase your position after confirming the experience meets your expectations.
For Existing Users
1. Evaluate Your Exposure
If your funds on Bithumb exceed 10% of your total crypto assets, consider gradually reducing exposure.
Not because the exchange will fail tomorrow.
But because:
internal control issues,
withdrawal delays,
operational uncertainty
can affect liquidity at any time.
2. Test a Withdrawal Now
Try withdrawing a small amount.
If it works, that indicates temporary stability.
If problems occur, discovering them early is better than discovering them during a crisis.
3. Monitor the Final FIU Legal Outcome
The court has suspended enforcement of the FIU sanction.
However, the final judgment has not been issued.
If the FIU wins the case, Bithumb could face stricter penalties.
4. Keep All Evidence
If you encounter withdrawal problems:
Keep:
customer service conversations
transaction records
account screenshots
withdrawal histories
Final Recommendation
Who Is Bithumb Suitable For？
Suitable users:
South Korean local users
Users who value regulated exchanges
Long-term users who prioritize compliance and banking access
Advantages:
Strong KRW liquidity
FIU license
KB Kookmin Bank partnership
Who Should Avoid Bithumb？
Not suitable users:
Users who frequently withdraw funds
Users with strict requirements for operational transparency
Users who cannot tolerate internal control risks
Reasons:
“13-hour withdrawal delays” indicate operational issues
The 620,000 BTC incident represents a confirmed internal control failure
Final Thoughts
Bithumbs situation is both unusual and unfortunate.
It obtained one of South Koreas most valuable FIU licenses, yet failed to prevent a mistake as basic as accidentally distributing 620,000 BTC.
It became South Korea‘s second-largest exchange, but has watched Upbit’s market dominance continue to widen.
Bithumb is unlikely to “run away.”
It has:
licenses,
banking relationships,
regulatory supervision.
But it may face a different challenge:
slow deterioration.
Possible consequences:
user outflows,
repeated internal control failures,
further market share decline.
Next Episode Preview: WikiBit Exchange Exit Risk Ranking #42 — Bitstamp by Robinhood Exchange. Stay tuned!
Risk Disclaimer:This article represents personal analytical opinions only and does not constitute investment advice. Cryptocurrency investment involves significant risks. Please conduct your own research and make decisions carefully.
Information in this article was updated on October 12, 2026. Please verify the latest information through multiple sources before making any decisions.
WikiBit, a regulatory app co-building protection with over 1 billion crypto investors. More crypto exchange real-time regulation info, please feel free check and download WikiBit App athttps://www.wikibit.com/
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