On February 6 and 7, 2026, South Korea’s major cryptocurrency exchange Bithumb mistakenly distributed about 620,000 Bitcoin (BTC) — worth roughly $40 billion-plus at prevailing market prices — to hundreds of users during what was supposed to be a modest promotional cash reward event; the error sparked a brief market selloff, raised regulatory concerns and exposed serious internal control weaknesses at the exchange.
What Exactly Happened in the $40 Billion Bitcoin Giveaway Error?
The Mistake: Bitcoin Instead of Korean Won
According to verified reporting and official statements from Bithumb, the incident occurred during a “Random Box” promotional reward event — an automated campaign intended to send small cash prizes (around 2,000 Korean won, about $1.40 USD) to participating customers. Due to a unit input error during payout configuration, the system credited Bitcoin (BTC) instead of Korean won on the internal ledger.
As a result:
- 695 user accounts were wrongly credited with BTC balances.
- Each affected account received at least roughly 2,000 BTC, leading to a total of about 620,000 BTC erroneously credited.
- At the time, this represented a notional value in excess of $40 billion–$44 billion USD depending on Bitcoin pricing at the moment of the error.
Importantly, the credits were initially on Bithumb’s internal exchange ledger — meaning users saw BTC balances reflected in their accounts, but these were not direct on-chain transfers to external wallets.
Immediate Market Impact
The erroneous credits triggered a wave of panic selling within the Bithumb platform’s order books, causing:
- Bitcoin prices on Bithumb to briefly slump about 17 % before stabilizing.
- Traders to execute sell orders as soon as BTC balances were visible, amplifying short-term volatility.
Bithumb responded swiftly by freezing trading and withdrawals on affected accounts within about 35 minutes after the error was first detected.
Recovery and Aftermath: What Was Recovered?
Recovery Efforts and Missing BTC
Bithumb announced that its engineers and operations teams managed to:
- Recover approximately 99.7 % of the 620,000 BTC erroneously credited.
- In practical terms: 618,212 BTC were reclaimed from accounts before they could be withdrawn or converted.
- Of the remaining portion, a large share of the roughly 1,788 BTC sold on the market was recouped (about 93 % of it) through internal reconciliation and compensation mechanisms.
- A small portion — around 125 BTC — remains unrecovered, likely because the holders had moved or converted it before accounts were frozen.
Bithumb has pledged to fully compensate users who suffered losses due to price fluctuations during the incident, offering to cover the price difference plus an additional bonus and waiving transaction fees for all users for a limited period.
Company Response and Apology
In official comments, Bithumb emphasised that:
- The error was the result of an internal operational mistake — not an external hacking or cybersecurity breach.
- The exchange has taken responsibility, apologised to customers, and is implementing controls to prevent a recurrence.
Why This Matt ers: Risk, Regulation, and Industry Implications
1. Exposed Weaknesses in Internal Controls
This event underscores a critical issue seen across many centralized crypto exchanges: inadequate automated safeguards that should prevent payouts exceeding actual held assets.
Structural failures included:
- Lack of fail-safes to block payouts when the unit of reward was erroneously set to BTC instead of KRW.
- No automated validation ensuring payouts could never exceed actual ledger or custody holdings — a risk that could lead to artificial supply shocks if unchecked. (Donga)
This is more than a human typo — it’s a system design flaw with systemic repercussions.
2. Short-Term Market Volatility and Liquidity Implications
Although the global Bitcoin market didn’t tank, the error caused significant localized volatility on Bithumb. Crypto assets are globally traded 24/7, but large platform errors with misleading balances can:
- Drive unrealistic sell pressures
- Create arbitrage dislocations
- Erode trader confidence
- Confuse pricing signals even on broader markets
Bithumb’s rapid lockdown of affected accounts helped mitigate deeper contagion effects — but questions remain about how such mistakes might ripple elsewhere.
3. Regulatory Backlash and Calls for Stricter Oversight
South Korea’s Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) were quick to spotlight the incident as a proof point that stricter crypto regulation is needed. Officials cited:
- Need for robust internal control and audit mechanisms for crypto exchanges.
- Concern that digital asset platforms cannot simply rely on end-user protections typical of traditional banks.
There are active discussions about regulatory reforms that would enforce system-level safeguards, mandatory asset verifications, strong reconciliation audits, and potential licensing repercussions for platforms that fail to adhere to basic risk controls.
4. Broader Industry Reflection on Exchange Risk
This incident draws stark parallels with past financial blunders — from Samsung Securities’ “ghost shares” error in 2018 to crypto exchange hacks — revealing that even with blockchain’s transparency, centralized systems can suffer catastrophic human and software errors.
Expert and Market Commentary
Industry analysts have emphasised that:
- Such errors damage trust in centralized custodial platforms, reinforcing the crypto ethos of decentralized custody.
- Errors of this scale, even if mostly reversed, expose the fragile bridge between digital asset technology and conventional corporate risk governance.
Professor Lee Jung-soo, a noted expert on financial law and technology, warned that this mistake “highlights the need for external oversight and built-in system checks that most exchanges currently lack. It’s not just a typo; it’s a structural risk to digital finance infrastructure.”
What Happens Next? Regulatory Pressure and Crypto Governance
Regulatory Probes
South Korean authorities have already convened emergency meetings with regulators and exchange representatives to:
- Conduct on-site inspections of crypto platforms.
- Examine balance ledgers and user protection measures.
- Evaluate whether penalties or new licensing conditions are justified.
There’s also growing momentum to include stricter asset verification and user fund segregation rules into the proposed Digital Asset Basic Act, a comprehensive bill aimed at tightening governance in digital markets.
Exchange Industry Reforms
In response to the crisis:
- Bithumb announced plans to implement multi-level transaction approvals and system safeguards.
- The industry may adopt automated payout unit checks and mandatory reconciliation audits.
- Exchanges could face compulsory external audits — similar to regulated banking systems.
Whether these changes materialize will depend on regulatory follow-through and investor pressure.
Conclusion: A Historic Crypto Blunder With Long-Term Lessons
The $40 billion Bitcoin giveaway error at Bithumb is more than a bizarre headline or funny meme fodder — it’s a salient lesson on the intersection of human error, automated financial systems, and market risk. While most of the erroneously sent Bitcoin was recovered, the episode revealed weaknesses that can erode confidence in centralized crypto platforms.
The broader crypto ecosystem — from traders to regulators — will almost certainly treat this event as a turning point in pushing for rigorous safeguards, stronger oversight and better risk controls, ultimately shaping how digital asset platforms operate going forward.
