In a staggering display of operational fragility, South Korean cryptocurrency exchange Bithumb has triggered global market panic after a "fat finger" error resulted in the accidental distribution of approximately $40 billion in Bitcoin. The catastrophic glitch, which occurred during a routine promotional event earlier this week, caused Bitcoin prices on the platform to decouple from global averages, plummeting 17% in minutes and triggering a cascade of automated liquidations. As of Wednesday, February 11, the exchange has suspended withdrawals for affected accounts while regulators launch an emergency probe into one of the costliest technical blunders in crypto history.

The $40 Billion Mistake: How 2,000 Won Became 2,000 Bitcoin

The incident, now being dubbed the "40 Billion Dollar Typo," originated from a configuration error during Bithumb’s "Random Box" giveaway. According to verified reports, the exchange intended to reward 695 users with a nominal prize of 2,000 Korean Won (approximately $1.40 USD). However, a critical input error in the distribution system swapped the currency unit from Won to Bitcoin (BTC).

Instead of receiving pocket change, each lucky winner was credited with 2,000 BTC—valued at roughly $136 million per user at the time. In total, the exchange inadvertently minted and distributed over 620,000 Bitcoin on its internal ledger, a sum that technically exceeded the exchange's cold wallet reserves and represented nearly 3% of Bitcoin's total circulating supply.

Panic Selling and Flash Crash

The market reaction was instantaneous and violent. As users woke up to billion-dollar balances, a wave of panic selling hit the Bithumb order books. The sudden influx of sell orders crushed liquidity, causing the price of Bitcoin on the exchange to flash crash to 81.1 million Won ($55,000), significantly decoupling from the global average of $68,000.

“It was pure chaos,” said a Seoul-based trader who witnessed the event. “The chart just fell off a cliff. Arbitrage bots went haywire, and for about 20 minutes, Bithumb was trading in a completely different reality from the rest of the world.”

Mass Liquidations and Withdrawal Halts

While the Bitcoin price glitch was localized, the collateral damage was severe. The sudden price plunge triggered Bithumb’s automated risk engines, resulting in the forced liquidation of dozens of leveraged positions. Reports confirm that at least 64 accounts using the platform's lending service were liquidated instantly as the value of their collateral evaporated in the flash crash.

Bithumb moved to stem the bleeding by suspending all withdrawals and trading for the affected accounts roughly 35 minutes after the error occurred. In a statement released today, CEO Lee Jae-won confirmed that the exchange has successfully recovered 99.7% of the erroneously distributed funds. However, approximately 125 BTC (worth nearly $9 million) remains unrecovered, having been withdrawn or swapped for other assets like Ethereum before the freeze took effect.

Regulators Launch "Unjust Enrichment" Probe

The fallout has attracted the immediate ire of South Korea's financial watchdogs. The Financial Supervisory Service (FSS) has launched an on-site inspection of Bithumb's headquarters, citing grave concerns over the platform's internal controls. Governor Lee Chan-jin issued a stern warning to users attempting to keep the accidental windfall, labeling it "unjust enrichment" and threatening criminal proceedings for those who refuse to return the assets.

“This is not a crypto lottery; it is a system failure,” Governor Lee told reporters. “Any funds derived from this error are subject to immediate restitution. We are investigating how such a massive protocol failure could bypass security checks.”

Impact on Crypto Finance News and Market Sentiment

This incident arrives at a precarious moment for the industry, reigniting fears of a crypto market crash in 2026 following the volatility seen in late 2025. While Bithumb has pledged to use its corporate treasury to cover the $9 million shortfall and compensate liquidated users with a 10% bonus, the reputational damage is immense.

Analysts warn that this exchange liquidation news highlights the persistent risks of centralized exchanges (CEXs). Unlike on-chain protocols where code is law, CEXs rely on internal accounting ledgers that are susceptible to human error. As the market attempts to stabilize, this event serves as a $40 billion reminder of the sector's fragility.

Key Takeaways from the Bithumb Glitch:

  • The Error: 2,000 BTC sent instead of 2,000 KRW to 695 users.
  • The Loss: $9 million unrecovered; Bithumb to cover costs.
  • The Impact: 17% flash crash on-platform and mass liquidations.
  • The Fix: Withdrawals halted, 99.7% funds clawed back.