A massive operational blunder at major South Korean exchange Bithumb has sent shockwaves through the digital asset industry, causing significant crypto market volatility today. On February 6, 2026, a Bithumb Bitcoin error resulted in the accidental distribution of approximately $44 billion worth of Bitcoin to users, triggering a flash crash on the platform and prompting an immediate investigation by financial authorities. The incident, which saw users receive 2,000 BTC instead of a small cash reward, highlights critical vulnerabilities in exchange infrastructure.
The $40 Billion Crypto Mistake: Anatomy of a Fat Finger Error
The chaos began late Friday during a routine promotional event intended to engage Bithumb’s user base. The exchange’s "Random Box" event was designed to distribute a modest Bithumb 2000 BTC reward—or so the system inputs suggested. In reality, the promotion was meant to award users 2,000 South Korean won (approximately $1.40 USD). However, due to a critical clerical error, an employee reportedly selected "Bitcoin" instead of "Won" as the currency unit.
This 40 billion dollar crypto mistake resulted in 695 users suddenly finding their wallets credited with 2,000 Bitcoin each—a fortune worth over $130 million per user at the time. In total, approximately 620,000 BTC were erroneously distributed, a figure representing roughly 3% of the total circulating Bitcoin supply. The sheer scale of the error momentarily created phantom wealth exceeding the market cap of many major corporations, leaving the exchange scrambling to contain the fallout.
Bitcoin Price Crash February 2026: Market Impact and Volatility
The market reaction was swift and violent. As stunned users realized the windfall, many immediately attempted to liquidate their holdings. This massive sell pressure caused a localized Bitcoin price crash February 2026 on the Bithumb platform. Internal charts showed Bitcoin plummeting over 17% to roughly 81 million won ($55,000 USD) within minutes, decoupling significantly from global prices which remained stable around $66,000.
While Bithumb froze withdrawals and trading for affected accounts within 35 minutes, the brief window was enough for chaos to ensue. Arbitrage bots and alert traders exacerbated the crypto market volatility today, as the sudden liquidity shock on one of South Korea's largest exchanges threatened to spill over into broader markets. Fortunately, the exchange’s "circuit breaker" mechanisms and rapid freeze prevented a global contagion event, though the reputational damage had already been done.
Recovery Efforts and Bithumb Refund Policy
In the aftermath of the crisis, Bithumb has announced that it successfully recovered 99.7% of the erroneously distributed funds. However, approximately 125 Bitcoin—valued at nearly $9 million—were successfully withdrawn or traded before the freeze could take effect. The exchange has stated it will cover these losses using corporate funds, ensuring that customer deposits remain safe.
To appease angry users and restore trust, the exchange has rolled out a comprehensive compensation plan. Under the new Bithumb refund policy terms for this incident, active users will receive 20,000 won as a goodwill gesture. Furthermore, traders who panic-sold their legitimate Bitcoin holdings during the flash crash will be reimbursed the full sale value plus an additional 10% compensation. The exchange has also waived trading fees for seven days to mitigate user churn.
South Korea Crypto Regulation News: FSS Launches Probe
The incident has drawn the immediate ire of regulators, sparking fresh South Korea crypto regulation news headlines. The Financial Supervisory Service (FSS) convened an emergency meeting on Saturday morning to assess the systemic risks posed by such operational failures. An on-site inspection team has been dispatched to Bithumb’s headquarters to review internal control systems and user protection protocols.
Regulatory Consequences
Authorities are particularly concerned about how a single "fat finger" error could bypass approval layers to move billions of dollars in assets. This event is likely to accelerate the passing of stricter compliance laws, potentially mandating multi-signature approval for all large-scale exchange disbursements. The Financial Services Commission (FSC) has warned that any evidence of gross negligence or insufficient internal controls could lead to severe penalties or even license suspension for the exchange.
As the investigation unfolds, the crypto community is left to ponder the fragility of centralized exchange infrastructure. While Bithumb has managed to claw back the majority of the funds, the "40 Billion Dollar Blunder" will likely serve as a cautionary tale for the industry for years to come.
