Major Bithumb Error Triggers Crypto Crackdown in South Korea
South Korea’s financial watchdog is moving toward tougher crypto oversight after a major operational failure at Bithumb exposed what regulators describe as serious weaknesses in exchange systems.
Key Takeaways
- Bithumb mistakenly sent out hundreds of thousands of Bitcoins instead of a small cash bonus.
- The error caused a brief sell-off before the exchange froze accounts.
- Nearly all of the wrongly distributed assets have now been recovered.
On February 6, 2026, Bithumb accidentally distributed roughly 620,000 Bitcoins as promotional rewards. Instead of sending users a small bonus of 2,000 won, the system credited several hundred accounts with about 2,000 BTC each, briefly pushing the value of the error above $40 billion.
Rapid Sell-Off and Emergency Controls
The mistaken distribution triggered immediate turmoil on the exchange. Some recipients rushed to liquidate the unexpected funds, leading to a sharp but short-livedly short-lived sell-off before trading was halted and accounts were frozen.
Bithumb said it managed to recover about 99.7% of the misallocated assets within days. Of the Bitcoins that were sold before controls were put in place, the exchange has already retrieved the vast majority.
The incident quickly drew the attention of the Financial Supervisory Service, which stressed that the coins never legally belonged to the recipients.
FSS Governor Lee Chan-jin said users who sold the accidentally credited Bitcoins are obligated to return them, underlining that system errors do not override ownership laws.
Regulators Point to Structural Failures
Rather than treating the event as an isolated glitch, the FSS described it as evidence of deeper structural problems in virtual asset systems. The watchdog argued that similar failures could pose systemic risks as crypto becomes more intertwined with traditional finance.
As part of its 2026 policy roadmap released on February 9, the regulator outlined a tougher approach. Proposed measures include heavier fines for IT failures, clearer personal responsibility for senior executives such as CEOs and CISOs, and the rollout of AI-based monitoring tools to flag abnormal price movements and suspicious trading activity within minutes.
Push for Broader Crypto Legislation
The FSS also plans to accelerate the second phase of South Korea’s Digital Asset Basic Act. The next stage is expected to tighten disclosure requirements for token issuance, improve transparency around exchange listings, and introduce a formal licensing framework for stablecoins.
Regulators additionally highlighted the unresolved problem of “ghost coins” – assets credited to users that an exchange does not actually hold – warning that this issue must be addressed before crypto platforms can be fully integrated into the legacy financial system.
For South Korea’s regulators, the Bithumb incident has become a clear warning that operational errors at major exchanges can escalate rapidly, reinforcing the case for stricter oversight across the sector.
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Alexander Zdravkov is a person who always looks for the logic behind things. He has more than 3 years of experience in the crypto space, where he skillfully identifies new trends in the world of digital currencies. Whether providing in-depth analysis or daily reports on all topics, his deep understanding and enthusiasm for what he does make him a valuable member of the team.
