- Bithumb credited 620,000 Bitcoins to users, mistaking the currency as BTC rather than Korean Won (KRW).
- Out of that, 99.7% Bitcoins were recovered, and the remaining 1,788 BTC were covered using company cash reserves.
- Users rushed to sell Bitcoins, resulting in Bithumb quoting $55,000 per Bitcoin rather than the price of $65,000.
- Authorities are reportedly determined to treat this as a structural flaw, as Bithumb was able to manufacture Bitcoins out of thin air.
What was the Bithumb Crisis?
On February 6, 2026, Bithumb sent 620,000 Bitcoins instead of 620,000 KRW to the winners of an internal competition. Within 35 minutes of realizing the error, authorities seized trading in the exchange and managed to recover 99.7% of all lost Bitcoins. However, 0.3% or 1,788 Bitcoins were transferred by users to different wallets and could not be recovered.
The company had to spend 1,788 Bitcoins from its own cash and crypto reserves to compensate for the loss.
Fake Bitcoins Crashed Market, Wipes out $80M
This sell-off crashed the price of Bitcoin on Bithumb to $55,000 as compared to the international market price of $65,000.
Bithumb credited 620,000 Bitcoins to its users despite having just 450,000 odd Bitcoins on its exchange. Since the transaction was off-chain rather than on-chain, the mismatch was not detected. If it had been an on-chain transaction, Bithumb would not have been able to process it.
These extra Bitcoins are now being referred to as Fake Bitcoins since they never existed, yet caused a supply shock.
A resulting liquidation round caused more than $80 million in trade liquidations.
Regulators Call it a Structural Flaw
Regulators are calling it a structural flaw because Bithumb was able to manufacture and send Bitcoins out of thin air. This questions the ability of exchanges to issue cryptocurrencies at levels far above their actual circulation.
FTX Moment?
A similar case occurred at FTX, where fake reserve data led to the siphoning of user funds by company executives, ultimately leaving the company bankrupt. However, in the case of Bithumb, it appears to be a mistake, rather than embezzlement.
Disclaimer: Crypto markets are volatile in nature. All articles on A2Z Cryptocurrencies are informational and are not financial advice. Please consult your financial adviser before investing.
