South Korean cryptocurrency exchange Bithumb is racing to recover more than $40 billion worth of bitcoin after a major internal error saw vast sums mistakenly credited to customer accounts during a promotional campaign. The incident, described by regulators as one of the most serious operational failures in the country’s digital-asset industry, has triggered market volatility, regulatory investigations and renewed scrutiny of risk controls at centralised crypto platforms.
A colossal mistake: how the error unfolded
The incident occurred on 6 February 2026, when Bithumb staff were processing routine promotional reward payments. According to the company and regulators, the amounts were accidentally entered in bitcoin units instead of Korean won, resulting in approximately 620,000 BTC being credited across thousands of customer accounts.
The error briefly gave customers access to assets worth more than $40bn at market prices. Within minutes, some recipients began selling the bitcoin on the platform, creating abnormal trading activity and sudden downward pressure on prices. Bithumb quickly halted trading and withdrawals on affected accounts and began reversing transactions.
The exchange later said it had successfully recovered around 99.7% of the misallocated bitcoin, but confirmed that a small portion had already been sold or withdrawn before controls were imposed.
Market impact: sharp volatility and a brief sell-off
The erroneous credits caused immediate turbulence in crypto markets. Bitcoin prices on local South Korean exchanges fell sharply during the incident, with intraday declines reported at up to 15–17% before stabilising.
Although broader global markets absorbed the shock relatively quickly, analysts said the episode highlighted how concentrated operational failures at major exchanges can transmit price volatility across the crypto ecosystem. Liquidity fragmentation and automated trading systems amplified the initial impact before trading halts were implemented.
Regulatory response and investigation
South Korea’s Financial Supervisory Service (FSS) launched an urgent investigation into Bithumb’s internal systems, governance and risk management processes. Regulators described the incident as a “catastrophic operational failure” and said it raised serious concerns about internal controls, transaction validation procedures and oversight mechanisms.
The watchdog is examining whether Bithumb breached financial regulations and whether penalties, corrective orders or management accountability measures are warranted. Parliamentary committees are also expected to review the incident as part of broader discussions on tightening oversight of digital-asset exchanges.
How could such an error happen?
While the immediate cause appears to have been a human input error, regulators and industry experts stress that such mistakes should not be able to propagate at scale without multiple layers of failure.
Robust exchanges typically enforce strict transaction caps, multi-person approvals, automated validation checks and real-time anomaly detection. The scale of the misallocation suggests weaknesses either in system design, internal controls, or enforcement of operational safeguards.
Cybersecurity specialists note that while blockchain networks themselves are immutable, off-chain systems operated by exchanges remain vulnerable to human and software errors, which can have equally damaging consequences.
Customer outcomes and legal complexities
Bithumb has begun contacting affected customers individually, requesting the return of any funds withdrawn or converted during the brief window before trading restrictions were imposed. Legal experts say recovery may prove difficult in some cases, particularly where proceeds were transferred off-platform or exchanged through third parties.
Questions also remain about legal liability. Under South Korean law, disputes may arise over whether customers who received funds in good faith are obligated to return them immediately, or whether court orders will be required.
The exchange has said it will cooperate fully with authorities and pursue all legal avenues to recover remaining funds.
Financial and reputational fallout for Bithumb
Although Bithumb insists the incident was not caused by hacking, the reputational damage is significant. The exchange has pledged to compensate users harmed by abnormal price movements and announced plans to overhaul internal controls, including tighter approval processes and enhanced monitoring systems.
Analysts warn that regulatory fines, compensation costs and legal expenses could weigh on the company’s finances, while customer trust may take longer to rebuild.
Wider implications for the crypto industry
The episode is being widely cited as a cautionary tale for the global crypto sector. Regulators and policymakers are expected to use the case to justify stricter operational standards for centralised exchanges, including mandatory audits, stronger segregation of duties, higher capital buffers and enhanced incident-reporting requirements.
The incident underscores that as crypto markets mature and handle increasingly large volumes, operational resilience and governance standards must match those of traditional financial institutions.
What happens next
Authorities are expected to publish findings from their investigation in the coming weeks, outlining whether enforcement action will follow. Bithumb must demonstrate meaningful reforms to its systems and governance to retain regulatory confidence.
For the crypto industry more broadly, the incident serves as a reminder that technological innovation does not eliminate the need for strong human oversight, disciplined processes and robust safeguards.
