South Korea’s Bithumb Crypto Exchange Blames System Flaws for $40 Billion Error
By Jack Kim, Reuters — February 11, 2026
SEOUL – South Korea’s second-largest cryptocurrency exchange, Bithumb, revealed on Wednesday that critical internal system flaws allowed an erroneous transfer of over $40 billion in assets last week. The mistake occurred during a promotional event in which the exchange accidentally distributed approximately 620,000 bitcoins to customers instead of the intended 620,000 won (about $426).
Massive Error in Bitcoin Giveaway
Bithumb’s CEO Lee Jae-won addressed the incident before a parliamentary committee, explaining that the giveaway amounted to nearly 15 times the exchange’s actual bitcoin holdings of 42,000 units. The colossal error was largely due to a lag of around 24 hours in transaction processing, which delayed updates to the virtual asset balances and resulted in the system misallocating far larger amounts than intended.
“We are acutely aware of the deficiency in internal system control,” Lee said, acknowledging that the exchange’s safeguards failed to prevent the error. The company’s policy to verify the transfer volume against actual holdings did not work as planned, and the funds were not secured in a separate account to guarantee transaction safety.
Aftermath and Recovery Efforts
Following the discovery of the error, Bithumb acted quickly to freeze the accounts of customers who received the erroneous bitcoins. Regulators reported that the exchange has since managed to retrieve the majority of the mistakenly distributed bitcoins. However, 1,786 bitcoins were sold within minutes before the freeze was implemented.
Authorities have stated that customers who sold the erroneously received bitcoins are legally obligated to return the assets to the exchange.
Market Impact and Regulatory Concerns
The mishap triggered a sharp 17% drop in bitcoin’s price, reflecting investor concerns over such a significant fault in one of the world’s busiest virtual asset markets. South Korea is renowned for its high volume of cryptocurrency trading, which magnifies the impact of operational failures at major exchanges.
Members of the National Assembly expressed disappointment at the failure in both corporate and governmental oversight of the rapidly evolving virtual assets market. Financial Supervisory Service (FSS) Governor Lee Chan-jin commented on the situation, noting that while he personally believes the cryptocurrency market should be regulated on par with traditional financial institutions like banks, current laws do not permit such oversight.
Broader Implications for Virtual Asset Regulation
This incident highlights the challenges regulators face in adapting existing financial frameworks to oversee cryptocurrency platforms effectively. It underscores the necessity for enhanced internal controls and more robust regulatory structures to prevent similar errors that can disrupt markets and undermine investor confidence.
As Bithumb scrambles to restore stability and confidence, the broader South Korean crypto sector may see increased scrutiny and calls for tighter regulations.
Exchange Rate Note: As of February 11, 2026, $1 USD equals approximately 1,455.47 South Korean won.
Reporting by Jack Kim; Editing by Ed Davies and Sonali Paul
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