Rewards Hub On February 6, 2026, a Bithumb staff member entered "BTC" instead of "KRW" while distributing rewards for a Random Box promotion. Instead of giving 695 users between 2,000 and 50,000 Korean won ($1.37 to $34), the system credited them with Bitcoin. The total came to approximately 620,000 BTC, worth over $40 billion. That is nearly 3% of Bitcoin's global supply.
Recipients started selling within minutes. Bitcoin on Bithumb dropped 17%, briefly touching 81 million won ($55,000) while the global market held above $66,000. Bithumb froze affected accounts within 35 minutes, recovered 99.7% of the erroneous distribution, and committed to compensating users who sold at depressed prices.
This was not a hack or a smart contract exploit. It was a data entry error that no internal system caught before execution. That distinction matters. It exposes something more uncomfortable than a security breach: the absence of basic operational safeguards at a major exchange.
Verify Your Funds with Phemex Proof of Reserves →
What Happened During the Bithumb Random Box Incident?
Bithumb ran a "Random Treasure Chest" promotion with cash prizes ranging from 2,000 to 50,000 won. Of 695 eligible users, 249 opened their boxes before the error was caught. The employee configuring the distribution selected Bitcoin as the currency unit instead of Korean won. A 2,000 won reward ($1.37) became 2,000 BTC ($132 million per user).
Time (KST, Feb 6) | Event |
~7:00 PM | Rewards distributed with wrong currency unit |
~7:08 PM | Internal monitoring detects abnormal activity |
~7:20 PM | Users begin selling credited BTC |
~7:35 PM | Trading and withdrawals frozen for affected accounts |
~7:40 PM | All affected accounts locked |
Within 5 min of freeze | BTC/KRW price normalizes |
No Bitcoin left the exchange. The credited amounts existed only on Bithumb's internal ledger, not as on-chain transactions. The 620,000 BTC were database entries, not blockchain assets.
How Did 620,000 "Ghost Bitcoins" Crash the Price?
Bithumb held approximately 42,619 BTC in custody as of Q3 2025, per Yonhap News Agency and CryptoQuant data. Its own balance sheet showed just 175 BTC in company funds. The system still allowed 620,000 BTC to be credited without triggering a rejection.
Those balances appeared as tradeable assets in user wallets. When recipients sold, they sold against real buy orders from other Bithumb users, draining liquidity and pushing prices down 17% in minutes.
Other exchanges were unaffected. The sell pressure stayed within Bithumb's order book because the credited BTC could not be withdrawn. Global arbitrage had no time to close the gap before Bithumb froze trading.
The result was a localized flash crash and a rare, extreme reverse "kimchi premium".
Condition | Normal Kimchi Premium | Bithumb Incident |
BTC price vs. global market | 2-5% higher in Korea | 15-17% lower on Bithumb |
Cause | Strong local demand, capital controls | Sell pressure from ghost balances |
Duration | Weeks to months | Minutes |
Scope | All Korean exchanges | Bithumb only |
Arbitrage opportunity | Limited by capital controls | None (withdrawals frozen) |
The premium normalized within five minutes of the freeze. For users with open positions or limit orders during that window, the damage was real. Bithumb estimated customer losses at approximately 1 billion won and announced compensation at 110% of the selling price for users who sold between 7:30 and 7:45 PM.
Why Didn't Bithumb's Systems Catch This?
Almost all centralized exchanges run on internal ledger systems. The balance you see in your account is a database entry, not a live on-chain balance. Blockchain transactions only happen at deposit and withdrawal. Everything in between, trades, transfers, reward distributions, runs on the exchange's internal database.
This is industry standard. It enables fast execution and low fees. It also means that if internal controls fail, an exchange can credit balances that correspond to no real asset. That is what happened at Bithumb.
The failures regulators are investigating:
No automated cap on reward size relative to the exchange's reserves
No secondary approval step for promotional payouts
No anomaly detection to flag a 620,000 BTC credit when the exchange held under 43,000
The system treated phantom balances as fully tradeable against real order book liquidity
South Korea's Financial Services Commission (FSC), Financial Supervisory Service (FSS), and the Digital Asset eXchange Alliance have launched an emergency task force. On-site inspections of Bithumb are underway, with similar reviews planned for other Korean exchanges.
The Korea Herald compared the incident to Samsung Securities' 2018 "ghost stock" scandal, where a dividend error created 2.8 billion shares that did not exist. That case triggered regulatory reform across Korea's securities industry. This one may do the same for crypto.
What Happens Next for Bithumb?
Bithumb has announced immediate measures:
110% compensation for users who sold at depressed prices during the incident
20,000 won payment to all users on the platform during the affected window
One-week trading fee waiver on all listed assets starting February 10
Internal process redesign for asset distribution
Planned AI-based anomaly detection
CEO Lee Jae-won stated the company will "prioritise customer trust and peace of mind rather than external growth."
The FSC has said the incident "exposed the vulnerabilities and risks of virtual assets." If inspections confirm violations, sanctions could include fines or suspension of operations. Bithumb was already under scrutiny before this. On February 4, South Korea's Fair Trade Commission opened an investigation into Bithumb's marketing claims about "the highest liquidity among domestic virtual asset exchanges," given that Upbit holds roughly 68% of Korean won trading volume compared to Bithumb's 28%.
What Should Exchange Users Take Away from This?
This incident did not involve stolen funds, protocol bugs, or external attackers. A data entry mistake at a billion-dollar exchange went unchecked. Hacks can be defended against with better security. Internal process failures require something different: verification layers and transparent systems that let users confirm their assets exist.
After FTX collapsed in 2022 because user deposits were secretly misused, the industry adopted Proof of Reserves as a trust signal. Bithumb's incident shows that reserves alone are not enough. The question is also whether an exchange's internal systems can prevent phantom balances from distorting markets.
Phemex publishes both Proof of Reserves and Proof of Liabilities, verified through Merkle Tree cryptography. Users can confirm their balance is included in total platform reserves by entering their Hashed Client ID. Reserve data is updated monthly and covers BTC, ETH, USDT, USDC, USD, TRON, BNB, XRP, SOL, SUI, and AVAX. Over 70% of user assets sit in offline cold storage with multi-signature authorization, and the platform partners with multi-party computation for institutional-grade custody using multi-party computation.
If you cannot independently confirm that your exchange holds what it claims, you are relying on the same kind of internal systems that Bithumb's error just exposed.
Verify Your Reserves on Phemex
Frequently Asked Questions
What was the Bithumb 2,000 BTC error?
A Bithumb employee entered "BTC" instead of "KRW" while distributing promotional rewards on February 6, 2026. This credited 695 users with Bitcoin instead of Korean won, totaling approximately 620,000 BTC ($40+ billion). It was an internal ledger mistake, not a hack.
Did users get to keep the Bitcoin?
No. Bithumb recovered 99.7% (618,212 out of 620,000 BTC). Of the 1,788 BTC sold before accounts were frozen, 93% has been recovered. Bithumb will cover any remaining shortfall from company reserves.
Why did Bitcoin crash on Bithumb but not elsewhere?
The credited BTC existed only on Bithumb's internal ledger. Sell orders hit Bithumb's order book only. No BTC left the exchange, so no pressure reached other platforms. The dislocation was fully localized and lasted about five minutes.
What is a reverse kimchi premium?
When Bitcoin trades lower on South Korean exchanges than on global markets. Korean prices normally carry a premium due to high retail demand and capital controls. The Bithumb incident temporarily inverted this, with BTC on Bithumb trading 15-17% below global rates.
How can I verify my funds on an exchange?
Look for cryptographically verifiable Proof of Reserves. On Phemex, enter your Hashed Client ID to confirm your balance is included in the Merkle Tree verification. This proves 1:1 backing without relying on third-party assurances.
Is Bithumb still operating?
Yes. Trading resumed after accounts were unfrozen and prices normalized. Bithumb is compensating affected users and cooperating with regulators. On-site inspections by the FSC and FSS are ongoing.
Bottom Line
A $1.37 promotional reward became a $40 billion mistake because one employee selected the wrong currency unit and no system stopped it. Centralized exchange ledgers can create asset balances that do not exist. Without proper controls, those phantom balances move markets and cost real users real money.
Don't trust. Verify.
Check Phemex Proof of Reserves
This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency trading involves substantial risk of loss. Always conduct your own research before making investment decisions.
