Bithumb’s ‘Fat Finger’ Nightmare: $40B Glitch Triggers FSS Probe

A decimal error turned a $1.40 promo into a $44 billion liability for South Korea’s second-largest crypto exchange.

South Korean regulators have launched an emergency investigation into Bithumb after an operational error mistakenly distributed approximately 620,000 BTC, worth over $40 billion at the time, to users during a promotional event on Friday.

The incident, caused by an employee confusing the input fields for “2,000 Korean won” (approx. $1.40) and “2,000 Bitcoin,” briefly flooded the exchange’s internal ledger with phantom assets, triggering a localized flash crash and forcing a platform-wide freeze.

The ‘Phantom’ Liquidity Crisis

According to reports from Chosun Biz, the error occurred at 7:00 p.m. local time on Feb. 6. Bithumb intended to distribute small cash rewards to 695 winners of a “Random Box” event. Instead, the system credited each user with a minimum of 2,000 BTC.

The sudden injection of non-existent Bitcoin roiled the exchange’s order books. While no BTC moved on-chain, the assets existed only on Bithumb’s internal database. Users immediately attempted to liquidate the windfall.

The result was chaotic. Bitcoin on Bithumb flash-crashed 17% to 81.1 million KRW (~$55,000), decoupling significantly from the global spot price of ~98 million KRW. Global markets remained largely unaffected, highlighting the isolated nature of the liquidity shock.

Regulatory Swarm & Clawbacks

Bithumb froze deposits and withdrawals within 35 minutes of the error, citing an “abnormal transaction detected by internal controls.”

“We failed to uphold the primary principles of stability and integrity. We are fully cooperating with the Financial Supervisory Service (FSS).” . Bithumb Official Statement

As of Saturday morning, the exchange claimed to have recovered 99.7% (618,212 BTC) of the erroneously distributed funds. However, roughly 125 BTC ($12.3 million) remains unaccounted for, likely cashed out by users who successfully withdrew or traded into other assets before the freeze.

The Financial Supervisory Service (FSS) has reportedly deployed an emergency inspection team to review Bithumb’s internal control protocols. This scrutiny comes at a sensitive time for South Korean crypto exchanges, which face tightening capital reserve requirements under the Virtual Asset User Protection Act.

Market Impact

Bithumb has pledged to reimburse users who suffered losses during the freeze and panic-selling period, offering 110% compensation for verified damages. The exchange will cover the remaining unrecovered funds from its own reserves.

While the immediate solvency threat has passed, the incident exposes a critical vulnerability in centralized exchange (CEX) architecture: the disconnect between internal ledger balances and on-chain reality. For a brief window, Bithumb’s database claimed to hold nearly 3% of the total Bitcoin supply, a mathematical impossibility that its trading engine failed to flag until prices collapsed.