South Korea’s watchdog flags tougher crypto rules after Bithumb’s $40 billion bitcoin giveaway

SEOUL, Feb 9, 2026, 17:22 (KST)

• South Korea’s financial market watchdog wants stricter crypto protections after Bithumb accidentally handed out over $40 billion worth of bitcoin to users.
• Regulators are considering more extensive exchange inspections and have identified “ghost coins” as an obstacle to bringing crypto in line with traditional finance.
• Bithumb retrieved 99.7% of the 620,000 bitcoin it mistakenly sent out in a promotional giveaway.

South Korea’s top financial regulator on Monday pointed to Bithumb’s accidental $40 billion bitcoin giveaway as a stark example of why the country needs stricter crypto regulations. “We are particularly worried about the issue of information systems,” said Financial Supervisory Service Governor Lee Chan-jin. 1

The warning comes as South Korea pushes to bring “virtual assets”—that’s regulator-speak for cryptocurrencies—further under the same regulations that apply to banks and brokerages. Authorities are also considering the timing and framework for introducing spot bitcoin exchange-traded products, a move that would let investors get exposure to bitcoin’s cash price through the stock market.

Regulators are zeroing in on more than just a single “fat-finger” mishap with Bithumb. The bigger worry is what the incident reveals about safeguards—or the lack of them—at exchanges tasked with quickly handling customer assets. The Financial Services Commission called it an example of how “vulnerabilities and risks of virtual assets” can come to light, warning that on-site inspections could be on the table if any gaps emerge in upcoming reviews.

Bithumb said it accidentally credited bitcoin to 695 users Friday evening, blaming a misentered amount during an event reward payout. The exchange spotted the error inside of 20 minutes, then moved to freeze trading and withdrawals for those accounts within 35 minutes. 2

The unexpected windfall sparked a selloff on Bithumb, knocking Bitcoin prices down 17% to 81.1 million won in a flash slump, according to Reuters and the exchange’s own charts. Bithumb said things snapped back to normal within minutes, crediting an internal safeguard that stopped a wave of forced liquidations on leveraged positions. 3

Bithumb managed to claw back 99.7% of the 620,000 bitcoin that had been mistakenly credited, and also recouped most of the proceeds from about 1,800 bitcoin that were sold prior to the trading halt. According to the company, not a single bitcoin from the error ended up in external wallets.

Bithumb pushed back against any talk of a security breach. “This incident is unrelated to external hacking or security breaches,” the company said, insisting its system security checks out and that customer assets remain safely managed.

Lee stated that anyone who’d sold the mistakenly credited bitcoin is still on the hook to return it. According to financial authorities, they’ve managed to reel back 99.7% of the bitcoin that was distributed by error, and have recovered 93% of the assets linked to bitcoin sold before trading was halted.

The last leg might turn out to be the toughest. If users who cashed out start contesting the process or debating when and how blame lands, that could draw out recoveries and ramp up calls for regulators to clarify what exchanges and customers are actually on the hook for when mistakes hit.

Lee flagged another concern: so-called “ghost coins”—crypto balances showing up in accounts despite not being supported by real assets. That’s a sticking point, he said. Until this is addressed, cryptocurrencies aren’t ready for legacy asset status. Lee also urged caution on launching spot bitcoin exchange-traded products before there’s more stability in the market.

Bithumb, South Korea’s number two after Upbit, is drawing fresh scrutiny as regulators weigh just how much oversight the country’s exchanges need—especially given how quickly billions can shift between prices and customer accounts.