Bithumb Incident May Affect CEX Business Eligibility, Korean Regulators to Conduct Industry-wide Investigation into "Phantom Bitcoin" Situation

February 9th – South Korea’s Financial Supervisory Service (FSS) chief Eun Sung-soo has labeled the Bithumb mistaken transfer incident a “disaster,” vowing a wide-ranging investigation into so-called “book transactions” involving unbacked virtual assets and the development of countermeasures. He noted that if Bithumb is found to have engaged in illegal conduct, all available legal measures will be taken. Moreover, he warned that once the upcoming Digital Assets Basic Law passes, licensing-based regulatory actions could be implemented—posing a direct threat to the virtual asset trading platform industry. Speaking at the “2026 Major Business Plan Briefing” at FSS headquarters in Seoul, Eun said: “After receiving reports of the Bithumb incident, we’ve launched an on-site inspection and plan to escalate it to a formal investigation if illegal activity is suspected. This is a serious situation that undermines the credibility of virtual asset trading platforms.” Eun emphasized the core issue: “The biggest problem is that Bithumb traded virtual currency it did not actually hold—an event that erodes trust in the entire virtual asset sector. We’re also reviewing the status of other platforms; this is an area requiring urgent improvement.” As of September last year, Bithumb held just 175 bitcoins, while customer entrusted holdings totaled 42,619 (for a combined 42,794). The mistaken transfer involved 620,000 bitcoins—more than 14 times its total holdings—meaning roughly 580,000 “ghost” bitcoins were sent out. This was possible because the transactions did not occur on the blockchain, but only as internal ledger changes (called “book transactions”). While book transactions themselves are not illegal, Bithumb failed to establish security mechanisms to prevent transfers of non-existent virtual assets.