Bitcoin Crashes on Bithumb After 2,000 BTC Mistake

A shocking error on South Korea’s Bithumb exchange temporarily sent Bitcoin prices plunging to $55,000 after users were accidentally credited with thousands of phantom BTC.

Key Takeaways

• Bithumb mistakenly credited users with 2,000 BTC each instead of a small $1.50 promotional reward.
• The glitch caused a flash crash on Bithumb, where Bitcoin traded nearly 16% below market price.
• Bithumb says no hack occurred and all assets remain secure.
• The incident adds pressure as regulators investigate Bithumb over prior promotional and liquidity claims.

What Happened?

South Korea’s second-largest crypto exchange, Bithumb, confirmed an internal mistake during a promotional campaign on February 6. The exchange intended to credit users with 2,000 Korean won, about $1.50 USD, but accidentally selected Bitcoin instead, crediting 2,000 BTC to hundreds of user accounts.

The error triggered intense sell pressure as users scrambled to liquidate the sudden windfall, causing Bitcoin’s price on the Bithumb BTC/KRW trading pair to plummet from around 97 million won to 81 million won. That translates to a drop from approximately $66,000 to $55,000 on that platform alone, while global exchanges like Binance and Coinbase remained unaffected.

Internal Glitch Causes Price Chaos

Bithumb says the glitch happened during a “lucky box event”, where small rewards were meant to be distributed. Instead, a staff input error led to massive BTC credits being reflected in users’ internal balances.

Key details:

• No actual Bitcoin was moved on-chain. The phantom BTC only existed in Bithumb’s internal ledger.
• Bithumb’s systems flagged the unusual transactions, and affected accounts were quickly restricted.
• The price crash was short-lived, lasting around five minutes before normalizing.
• Despite the chaos, Bithumb’s liquidation prevention systems worked, avoiding broader market impact.

An internal statement from Bithumb confirmed that no external hack or security breach occurred, and that customer funds are safe. The exchange did not clarify whether trades made during the flash crash would be reversed or honored, and it also has not confirmed the total number of affected users or the full scale of the BTC error.

Rare “Reverse Kimchi Premium”

Typically, Korean crypto exchanges trade at a premium compared to global markets due to local demand and capital controls, known as the “Kimchi premium.” This event, however, created a reverse premium, with Bithumb trading Bitcoin at a steep discount.

According to data from on-chain analytics platform Lookonchain, Bitcoin on Bithumb briefly traded more than 10 percent lower than the global average. This kind of isolated price dislocation is extremely rare for a highly liquid asset like Bitcoin and is almost always tied to operational failures or localized liquidity shocks.

Regulatory Pressure Mounts

This incident couldn’t have come at a worse time for Bithumb. The platform is already under scrutiny by South Korea’s Fair Trade Commission, which is investigating:

• Potentially misleading marketing claims about Bithumb’s trading liquidity.
• A failed promotional campaign that left 30,000 users without promised rewards.

With over 2.4 million monthly active users, Bithumb is a major player in South Korea’s crypto landscape, second only to Upbit. These repeated operational slip-ups may undermine trust and add fuel to calls for stricter exchange oversight.

CoinLaw’s Takeaway

In my experience covering crypto markets, exchange-specific crashes like this are more than technical flukes. They shake investor confidence, especially when involving huge sums like $133 million worth of phantom BTC. While Bithumb insists funds are safe, the lack of immediate clarity around trade reversals or internal controls is concerning.

This was not just a typo. It was a systemic failure that triggered real trading and financial consequences for users. And with regulators already circling Bithumb, this event could be a tipping point that forces tighter governance across Korean crypto exchanges.

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