Bithumb’s $40B Bitcoin distribution error intensifies regulatory scrutiny over digital asset systems.
South Korea faces a Virtual Asset Security Crisis after BTC loss, after authorities confirmed that 22 Bitcoin stored by the Gangnam Police Station went missing. Officials discovered the loss during a nationwide inspection of investigative agencies.
The review began after a separate case revealed that 320 Bitcoin had disappeared from the Gwangju District Prosecutors’ Office.
Police confirmed the Gangnam case on the 13th. The 22 Bitcoin had been voluntarily submitted during an investigation around November 2021. However, authorities did not detect the loss earlier because the investigation had been suspended.
Officials valued the missing 22 Bitcoin at about 2.1 billion won, or approximately $1.8 million, based on market prices that day. The National Police Agency launched the nationwide review following the Gwangju case. That inspection led directly to the discovery in Seoul.
An internal investigation found that Gangnam Police stored the Bitcoin in a USB-type cold wallet. Investigators confirmed that the physical storage device remained intact. However, the Bitcoin inside the wallet were completely lost.
Authorities stated that they uncovered the discrepancy during the broader inspection process. They did not release technical details about how the coins moved. Instead, they referred the matter for further investigation.
The Gyeonggi Northern Provincial Police Agency has opened a full probe. Officials in South Korea will examine the circumstances surrounding the loss. They will also determine whether internal participants were involved.
This case follows a similar incident at the Gwangju District Prosecutors’ Office. In December, officials discovered that 320 Bitcoin seized in connection with a crime had gone missing. Prosecutors had secured those coins in June and July of last year.
In the Gwangju case, authorities also confirmed that the storage device remained intact. However, the internal BTC were gone.
The South Korea Faces Virtual Asset Security Crisis After BTC Loss has unfolded alongside a separate digital asset incident involving Bithumb. TheCoinRepublic reported that the exchange accidentally distributed more than $40 billion in Bitcoin during a promotional event.
Bithumb had planned to distribute small cash rewards of 2,000 Korean won, or about $1.40, to users. Instead, the system sent at least 2,000 Bitcoin to each participating customer. The company later stated that it recovered nearly all of the distributed Bitcoin.
Bithumb clarified that the incident did not involve hacking or an external breach. The company attributed the issue to an operational error. It stated that system security and customer asset management remained unaffected.
Lee Chanjin, governor of the Financial Supervisory Service, addressed the matter at a press conference. He said authorities were closely reviewing electronic systems. He also stated that the government was considering legislative measures to strengthen oversight of digital assets.
South Korea introduced the Virtual Asset User Protection Act in 2024. Lawmakers enacted the law after the 2022 collapse of TerraUSD and Luna. Authorities now aim to expand regulatory control over digital assets.
Bithumb announced that it had established a Company-Wide Crisis Management System after the incident. It also formed an Investor Damage Relief Task Force. The company stated that it would provide compensation for trades executed under unfavorable conditions during the event.
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