Bithumb’s $40B Bitcoin Blunder Triggers South Korea Market Probe

Internal system flaws trigger regulatory scrutiny as 1,786 missing bitcoins prompt market investigations.

2026-02-11

South Korea’s second-largest crypto exchange, Bithumb, admitted that severe internal flaws left its systems vulnerable to potential sabotage and failed to prevent the mistaken transfer of roughly $40 billion in bitcoin to customers. The blunder triggered a 17% drop in bitcoin prices on the exchange. The error briefly caused bitcoin prices on Bithumb to plunge 17 percent, prompted a probe by South Korea’s Financial Supervisory Service and exposed gaps in the exchange’s asset-matching and account-segregation controls. While Bithumb has recovered most of the coins, 1,786 bitcoins sold before accounts were frozen remain missing.

The CEO admitted that Bithumb’s policy of ensuring the volume of assets to be transferred matched its actual holdings failed, and that the amount was not earmarked in a separate account to ensure the transfer’s safety. The exchange has recovered most of the bitcoin, although 1,786 that were sold within minutes before the exchange froze customers’ accounts are still missing. The customers who sold those missing bitcoin are legally bound to return them. Members of parliament expressed dismay at the lack of government and corporate oversight in the country’s virtual assets market.

The Financial Supervisory Service said it will start investigations into high-risk practices that undermine market order, including large-scale price manipulation by whales, trading schemes tied to suspended deposits and withdrawals and coordinated pump tactics fueled by social media misinformation. The watchdog also said it plans to build tools that automatically extract suspicious trading patterns at the second and minute levels, alongside text-analysis systems using artificial intelligence to flag potential market abuse. Bithumb CEO Lee Jae-won said the giveaway amounted to 15 times the platform’s 42,000 bitcoins, mainly due to a 24-hour lag in processing transactions and delayed updates to its crypto holdings balance. “We are acutely aware of the deficiency in internal system control,” Lee told a parliamentary committee hearing recently.