South Korea Probes Bithumb After $40B Bitcoin Crediting Error

Key Insights:

• Bithumb crypto exchange accidentally credited 695 users with 620,000 Bitcoin during a reward event.
• Bitcoin/KRW dropped to approximately $55,000 due to a massive sell-off.
• South Korea’s FSC is cond ucting an emergency inspection to look into the incident.

South Korea’s Financial Supervisory Service (FSS) has intensified its investigation of the largest crypto exchange in the country, Bithumb, into a full-blown investigation after a disastrous system bug mistakenly gave users a credit of $40-44 billion of Bitcoin.

The Bithumb glitch identified on February 6, 2026, turned what could have been an otherwise regular promotional reward into what nearly qualifies as an existential crisis of the platform.

The crypto exchange announced in a statement that the issue occurred while it was operating a reward program under which users were to receive bonuses of 2,000 Korean won. A system setup glitch led to the issuance of the prizes in Bitcoin instead.

As a result of the Bithumb glitch, 695 users were wrongly credited with 620,000 BTC. The exchange saw Bitcoin/KRW drop to approximately $55,000 due to a number of people selling the cryptocurrency immediately.

Other exchanges continued trading bitcoin above $66,000 during the same period. Market stress has deepened as whales are accumulating Bitcoin.

Bithumb Crypto Exchange Incident Timeline

Bithumb’s internal monitoring system detected suspicious activity at 7:00 PM KST on February 6. In eight minutes, customers started trading the so-called phantom balances of BTC in their wallets.

Bithumb saw the BTC/KRW pair fall 17-20%, to 81 million won (equivalent to 55,000), creating an inverse Kimchi premium. By 7:35 PM, only 35 minutes after it was discovered, exchange employees blocked dozens of frozen accounts and trading.

This quick action rescued the bleed: the crypto exchange recovered 99.7% of the miscredited tokens, and only approximately $9-13 million remained unrecovered through immediate sales by the user or withdrawals.

Bithumb Glitch Exposed: Fat-Finger Error in Rewards Module

Specialists explain the Bithumb glitch as a fat-finger error in the rewards accounting module; the system misapplied KRW units to Bitcoin during a promotional payment.

The phantom balances became tradable assets in opposition to real buy orders and depleted the liquidity of the order books without affecting the external reserves.

The 50,000 BTC holding limit that Bithumb had imposed served as an essential firewall, as a complete bank-run cascade ensued even in the illusionary windfall of the supposedly $40 billion.

It was not externally hacked; internal controls merely were not in place to check the quantum of payout before it was executed.

The Bithumb glitch has revealed weaknesses in automated smart contract-like systems on centralized exchanges (CEXes), where microsecond differences are amplified into systemic shocks.

Regulatory Response

An emergency meeting of the FSC and FSS in South Korea was held on February 7 and was presided over by FSC Vice Chairman Kwon Dae-young. Members of the Financial Intelligence Unit also attended. It was labeled by them as a large-scale misdelivery and opened on-site inspections at Bithumb.

Representatives of the Financial Intelligence Unit and the Financial Supervisory Service were in attendance. Regulators said they have been monitoring the fallout from the Bithumb glitch and described the mistake as a mass misdelivery.

The CEO of the crypto exchange, Lee Jae-won, publicly apologised and presented an extensive compensation strategy. In his view, the company bears full responsibility and will strive to maintain client trust. In other news, Bitcoin USD is facing tighter conditions after Chinese regulators instructed banks to limit US Treasury purchases, citing concentration risk and volatility.

Historical Parallels

Although the Bithumb incident is notable for its impact on cryptocurrencies, it reflects a broader trend in traditional finance. In April 2024, Citigroup also erred by depositing a customer account with 81 trillion rather than 280.

This was found out and fixed within a few  hours. The mistake sailed through two rounds of employee reviews.

The primary difference is in the recovery speed. In traditional financial systems, there are other methods to reverse erroneous transactions.

The operational controls at cryptocurrency exchanges are a serious concern, as a single employee error could cause a $40 billion problem. In significant transactions, mainstream financial institutions typically apply multiple levels of verification.

The Bitcoin market should have stronger internal regulations, as evidenced by the apparent lack of internal measures at Bithumb.