Bithumb Faces Probe Over $43 Billion Bitcoin Distribution Error

TLDR

• South Korea’s Financial Supervisory Service has launched a formal investigation into Bithumb following a $43 billion Bitcoin distribution mistake.
• The error occurred when Bithumb mistakenly credited users with 620,000 Bitcoin during a routine promotional event.
• The exchange froze affected accounts within 35 minutes and recovered most of the mistakenly distributed Bitcoin.
• Bithumb pledged to compensate users at 110% of their losses after the Bitcoin-KRW trading pair dropped by 15%.
• South Korean lawmakers are calling for tighter regulations on cryptocurrency exchanges in light of the Bithumb incident.

South Korea’s Financial Supervisory Service (FSS) has initiated an investigation into cryptocurrency exchange Bithumb after a critical error led to the accidental distribution of Bitcoin worth billions of dollars. On February 6, 2026, the exchange mistakenly credited users with 620,000 Bitcoin, valued at around $40 billion to $44 billion. The incident has raised concerns about internal controls and risk management at the exchange.

Error Results in Massive Bitcoin Distribution

On February 6, Bithumb launched a promotional campaign offering modest cash rewards to users. However, due to a staff member’s mistake, the exchange distributed 620,000 Bitcoin instead of the intended cash. This error was caused by a mix-up in the payout system, where Bitcoin was used instead of Korean won as the reward unit.

Within minutes, many users discovered they had received vast amounts of Bitcoin in their accounts. The amount issued was over 13 times Bithumb’s estimated total Bitcoin holdings. As soon as the error was identified, the exchange froze affected accounts and stopped all transactions within 35 minutes.

Bithumb’s Response and Recovery Efforts

Bithumb acted swiftly to recover the misallocated Bitcoin, successfully retrieving 99.7% of the distributed assets. However, about 125 Bitcoin, worth millions, remained unrecovered after some users sold or withdrew their mistakenly credited Bitcoin. The exchange has pledged to compensate affected users at 110% of their losses, following a 15% drop in the BTC-KRW trading pair.

Bithumb also announced plans to strengthen its internal controls and set up a 100 billion won ($68 million) user protection fund. This initiative aims to safeguard against similar incidents in the future. Despite these efforts, the FSS has escalated its investigation into the exchange’s internal systems and compliance with regulatory standards.

Regulatory Scrutiny and Political Reactions

The incident has drawn widespread political attention in South Korea, as lawmakers debate the Digital Asset Basic Act. Lawmakers from the opposition have criticized the lack of structural safeguards in the cryptocurrency sector. Some have raised concerns that exchanges could face liquidity issues if they continue to operate without sufficient internal control.

The ruling Democratic Party has also expressed concerns, emphasizing the need for tighter regulations on crypto exchanges. They have suggested capping individual ownership stakes in exchanges and aligning their legal responsibilities with those of traditional financial institutions.

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