It was a typo that briefly made hundreds of South Korean crypto traders billionaires—at least on paper. On Friday evening, a catastrophic internal error at Bithumb, South Korea’s second-largest cryptocurrency exchange, accidentally credited users with approximately 620,000 Bitcoins worth a staggering $44 billion. The incident, now dubbed the Bithumb Bitcoin glitch, triggered a localized 17% price crash and has reignited fierce debate over centralized exchange risk and the opacity of internal accounting systems.
The $44 Billion Typo: Anatomy of a Crypto Exchange Error
The chaos began around 7:00 PM KST on February 6, 2026, during a routine promotional event. Bithumb had launched a "Random Box" campaign intended to distribute modest cash rewards of roughly 2,000 Korean won ($1.40) to active users. However, in a monumental lapse of internal controls, an employee reportedly selected "Bitcoin" (BTC) instead of "KRW" as the distribution unit.
Instead of receiving pocket change, 695 lucky participants found their accounts credited with at least 2,000 Bitcoins each. In an instant, the exchange’s internal ledger generated a phantom Bitcoin supply equivalent to nearly 3% of the total circulating Bitcoin in existence. For context, Bithumb’s actual reserves at the time were estimated to be around 46,000 BTC, meaning the accidental credit exceeded the exchange's real holdings by more than 13 times.
Phantom Supply & The 35-Minute Flash Crash
While the "ghost coins" never existed on the blockchain, the exchange's trading engine treated them as real assets. Overjoyed—and perhaps confused—users immediately rushed to liquidate their windfall. This massive injection of artificial supply into the order book caused a violent Bitcoin price crash on the platform.
Within minutes, Bitcoin trading on Bithumb plummeted from global parities of around $71,000 to as low as roughly $55,000 (81.1 million won)—a 17% collapse. The exchange's automated monitoring systems eventually flagged the anomaly, freezing withdrawals and trading for affected accounts 35 minutes after the distribution began. By then, the damage to the local order book was done.
Why Global Markets Remained Stable
Crucially, this crypto exchange error 2026 remained a localized crisis. Because South Korea’s crypto market operates in a somewhat closed environment due to capital controls—often referred to as the "Kimchi Premium" ecosystem—and because the erratic trades were halted before arbitrageurs could bridge the gap, global Bitcoin prices remained largely unaffected. The "phantom" coins were ledger entries only; no on-chain transactions were broadcast to the Bitcoin network, preventing a systemic contagion.
The Clean-Up: Recovery and Regulatory Fury
In the aftermath, Bithumb scrambled to reverse the transactions. According to official statements released this morning, the exchange has successfully recovered 99.7% of the erroneously distributed funds, reclaiming 618,212 BTC. However, approximately 1,788 BTC (valued at roughly $125 million) were successfully sold or withdrawn by users before the freeze. Bithumb has pledged to cover these losses using corporate funds and has offered a 10% compensation bonus to traders affected by the panic selling.
The incident has drawn immediate scrutiny from South Korea's Financial Supervisory Service (FSS), which has launched an emergency on-site inspection. This South Korea crypto news story draws uncomfortable parallels to the 2018 Samsung Securities "ghost stock" error, where a similar typo flooded the market with billions in non-existent shares. Regulators are now questioning how a single employee's input error could bypass all safety checks to create financial liabilities exceeding the GDP of some small nations.
CEX Transparency and the Risks of 'Paper' Bitcoin
The Bithumb glitch serves as a stark reminder of the structural vulnerabilities inherent in centralized platforms. Unlike decentralized exchanges (DEXs) where trades occur on-chain, CEXs rely on internal databases to track user balances. This disconnect allows for the creation of phantom Bitcoin supply—assets that appear on a screen but aren't backed by on-chain reserves.
For investors, the event underscores the critical importance of CEX transparency. While Bithumb was solvent enough to absorb the loss from the unrecovered coins, a similar error at a smaller, less capitalized exchange could have led to immediate insolvency. As the industry moves forward in 2026, demands for real-time Proof of Reserves (PoR) that can cryptographically prevent such "fat finger" errors are likely to reach a fever pitch.
