Bithumb’s $40 billion Bitcoin error triggers market panic and massive sell-off

SEOUL — South Korean cryptocurrency exchange Bithumb announced it will compensate users for losses incurred during a flash crash triggered by a massive clerical error that saw the platform accidentally distribute more than $40 billion in Bitcoin.

The incident occurred on Feb. 6 when a staff member mistakenly entered "Bitcoin" instead of "Korean won" while processing rewards for a promotional event. Instead of receiving the intended 620,000 won, 695 users were credited with 620,000 Bitcoin each, according to the Yonhap news agency.

Bithumb officials detected the error within 20 minutes, but the discovery did not prevent a brief market panic. Several users immediately sold the mistakenly credited Bitcoin, causing the asset’s price on the exchange to plummet 17%, falling from 98.29 million won to 81.1 million won.

Bithumb CEO Lee Jae-won apologized for the blunder and committed to fully reimbursing customers who sold their assets during the price drop. The exchange will also provide an additional 10% bonus as part of the compensation package.

The exchange has since frozen affected accounts and successfully recovered 99.7% of the distributed coins. Total damages from the incident are estimated at approximately 1 billion won.

South Korea’s Financial Services Commission has convened an emergency meeting to review the lapse and the exchange’s response.

SEOUL — Bithumb’s recent clerical blunder has laid bare a systemic vulnerability within the digital asset industry: the profound fragility of operational workflows. That a single individual could trigger market volatility measured in the tens of billions of dollars underscores a critical deficit in internal controls, even at one of South Korea’s premier exchanges. This was not the result of a sophisticated cyberattack, but rather a fundamental human failure—an occurrence that further erodes investor confidence in the inherent stability of centralized platforms.

While the error was egregious, Bithumb’s crisis management was notably swift. By detecting the anomaly within 20 minutes and moving to freeze assets, the exchange managed to recover nearly the entire volume of misplaced Bitcoin. The firm’s subsequent pledge to provide 100% restitution plus a 10% "bonus" represents an aggressive attempt to stifle public outcry and salvage brand equity. However, in an asset class where reputation is paramount, the damage to institutional trust is a debt that financial compensation alone may struggle to settle.

The timing of the incident is particularly precarious, occurring as the market continues to grapple with the fallout from the mass liquidations of October 2025. The lapse will almost certainly serve as a catalyst for the South Korean Financial Services Commission (FSC) to move toward more stringent oversight. Regulators are now expected to mandate rigorous operational risk protocols, focusing on the human-element redundancies that failed in this instance. Ultimately, the Bithumb episode serves as a sobering reminder: in the high-stakes ecosystem of digital assets, the most significant threats to market integrity often stem not from price volatility or external hackers, but from the most basic of internal lapses.