Massive Bitcoin Mistake at Bithumb: Crypto Exchange Accidentally Distributes Billions in BTC: What Happened?

South Korea’s major cryptocurrency exchange Bithumb unintentionally sent out more than $40 billion worth of Bitcoin, triggering one of the most extraordinary errors in crypto history and prompting calls for tougher digital asset rules.

The incident unfolded on 6 February 2026 when Bithumb was running a reward campaign to give users a small cash bonus. Instead of crediting roughly 2,000 Korean won (about $1.40) per eligible account, a system fault caused Bithumb’s platform to issue 2,000 bitcoins to each of the affected users. That adds up to about 620,000 BTC sent to 695 accounts before the error was spotted.

Bitcoin Distribution Error Explained: Timeline and Recovery Efforts

Bithumb detected the anomaly rapidly, within about 35 minutes, and halted trading and withdrawals on the impacted accounts to contain the issue. Thanks to swift action, the exchange has been able to recover nearly 99.7% of the mistakenly distributed Bitcoin.

However, a small amount remains unrecovered, as some recipients had already moved or sold parts of their holdings before the restrictions were fully in place. The exchange insists the problem was caused by an internal processing error, not a security breach or hack, and said it will absorb any losses from its own reserves.

To help users affected by forced or panic selling during the incident, Bithumb has announced plans for compensation and pledged to tighten its internal controls and approval mechanisms to prevent a repeat.

Market Impact and Why Bitcoin Prices Fluctuated

The sudden creation of billions in Bitcoin caused temporary price distortion on the Bithumb platform, with Bitcoin’s value dipping briefly before aligning with global markets. The unusual trading activity drew attention from traders and market observers, though prices soon stabilised once corrective measures were applied.

Industry analysts said the episode underlined how fragile crypto market structures can be when operational systems fail, even if no hack or malicious attack occurs.

Regulatory Response: Calls for Stricter Crypto Rules in South Korea

South Korean financial authorities reacted strongly to the event. The Financial Supervisory Service (FSS) described the mistake as revealing “structural problems” in exchange operations and said it highlighted systemic risks in the way digital asset platforms function.

Regulators are now pushing for stricter oversight and clearer rules for exchanges, including stronger investor protections and more robust internal controls. This follows South Korea’s Virtual Asset User Protection Act of 2024, and officials are considering additional measures to tighten governance, risk management, and operational standards.

Lawmakers and financial watchdogs are expected to hold hearings, review current policies, and propose new regulatory frameworks aimed at preventing such large-scale errors and enhancing market stability.

What Happens Next for Bithumb and Crypto Regulation?

Bithumb continues working to resolve the remaining outstanding issues with users and finalise compensation arrangements. Meanwhile, regulators are reviewing inspection procedures and planning fresh rules for the digital asset sector.

The Bithumb Bitcoin mistake has become a landmark event, not because of a cyberattack, but because it showed how easily operational faults can create massive financial disruption. It is likely to shape future crypto regulation in South Korea and beyond.