South Korean financial authorities convened an emergency oversight meeting on February 13, 2026, addressing one of the most catastrophic operational failures in cryptocurrency history. The Bithumb Bitcoin error, which saw the exchange mistakenly distribute a staggering 620,000 BTC payout mistake to users, has sent shockwaves through the global market. While the exchange scrambled to recover the assets—valued at approximately $41 billion—the incident has triggered a massive Bithumb class action lawsuit and renewed calls for stricter South Korea crypto regulation 2026.
The Multi-Billion Dollar "Fat Finger" Mistake
The chaos began on February 6, when a Bithumb employee reportedly made a simple yet devastating data entry error during a promotional event. The campaign was intended to reward active users with small cash prizes ranging from 2,000 to 50,000 Korean won (approximately $1.40 to $36). However, instead of inputting the currency as "Won," the internal system processed the rewards as "Bitcoin."
Consequently, hundreds of users woke up to find their accounts credited with thousands of Bitcoin. In total, the Bitcoin exchange operational failure resulted in the accidental distribution of 620,000 BTC. To put this into perspective, the error amounted to roughly 3% of the entire circulating supply of Bitcoin, creating a "phantom" balance on the exchange that exceeded its actual reserves by orders of magnitude.
Market Panic and Instant Volatility
The massive influx of non-existent assets caused immediate crypto market volatility on the platform. As shocked users attempted to liquidate their windfall, the price of Bitcoin on Bithumb plummeted by nearly 17%, crashing to approximately 81.1 million won ($55,000 USD) while global prices remained stable near $66,000. This stark arbitrage opportunity and panic selling forced the exchange to freeze all withdrawals and trading within 35 minutes of the error.
Emergency Recovery Efforts
Bithumb's technical teams managed to reverse the majority of the erroneous transactions, reclaiming 99.7% of the distributed funds shortly after the freeze. However, reports indicate that approximately 125 BTC (worth nearly $9 million) were successfully withdrawn or traded before the lockdown, leaving the exchange liable for the shortfall. CEO Lee Jae-won issued a public apology, pledging to cover all unrecovered losses with corporate funds and offering a compensation package of 110% to users who panic-sold their actual holdings during the flash crash.
Legal Battle: Class Action Lawsuit Looms
Despite the rapid recovery efforts, the fallout has been severe. A growing group of investors, represented by major legal firms, is preparing a Bithumb class action lawsuit. These plaintiffs argue that the exchange's negligence caused significant financial distress and that the sudden freezing of assets prevented legitimate trading strategies during a period of high volatility.
In response to the mounting legal pressure, Bithumb has retained Kim & Chang, South Korea’s largest law firm, to navigate the complex web of liability. Legal experts suggest the case could set a precedent for digital asset internal controls, determining whether exchanges can be held fully liable for market movements triggered by their own operational negligence.
Regulators Step In: South Korea Crypto Regulation 2026
The Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) are taking a hard line. During the emergency meeting on February 13, 2026, regulators slammed the incident as a failure of basic internal governance. The event has accelerated the timeline for new legislative measures under the framework of South Korea crypto regulation 2026, which aims to mandate stricter separation of duties and automated safeguards for large-scale transfers.
Authorities have launched an on-site inspection of Bithumb’s headquarters, seizing transaction logs and internal communication records. The investigation seeks to determine why the exchange’s systems did not automatically flag a transfer request that exceeded the company’s total assets—a basic safety feature that was evidently absent or bypassed.
Restoring Trust in Digital Asset Markets
For the broader crypto industry, the Bithumb incident serves as a stark reminder of the fragility of centralized exchanges. While "code is law" on the blockchain, centralized platforms remain vulnerable to human error. As the dust settles, the focus now shifts to how South Korean regulators will enforce digital asset internal controls to prevent a recurrence. For now, traders are left wary, and Bithumb faces the uphill battle of rebuilding its reputation amidst billion-dollar scrutiny.
