South Korean MPs Question Bithumb CEO Over $40B Bitcoin Transfer Mistake

Highlights:

• Bithumb CEO admitted daily ledger checks failed to catch the 620,000 BTC error. 
• Regulator criticized Bithumb’s outdated system and praised Upbit’s five-minute system.
• The FSS chief said the mistake was severe and urged real-time blockchain verification.

The National Assembly of South Korea targeted Bithumb after the exchange committed a massive blunder on February 6. During a promotional activity, Bithumb mistakenly sent 620,000 Bitcoins to its users, which was significantly higher than the amount it actually had. The value of the blunder was estimated to be between $40 billion and $44 billion.

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On February 11, Bithumb CEO Lee Jae-won appeared before the National Policy Committee and explained what went wrong. He said the exchange only checks its internal ledger against actual crypto holdings once per day. Because of this daily delay, there was a blind spot, and the huge error went unnoticed until it was too late. He also admitted that the system for checking transfer amounts against real holdings was not working for this payout. As a result, there were no real-time safeguards to prevent the mistake.

South Korean lawmakers hauled in Bithumb’s CEO on Wednesday seeking answers over an erroneous $40 billion Bitcoin transfer triggered by human error, intensifying scrutiny of a crypto market that has eclipsed equities in retail participation https://t.co/OP3VVA1TVm

— Bloomberg (@business) February 11, 2026

Bithumb Faces Criticism Over Outdated System

Financial Supervisory Service chief Lee Chan-jin criticized Bithumb for using an outdated reconciliation process. He noted that rival exchange Upbit checks its holdings every five minutes, setting a better standard. He warned that even five minutes is a long delay and urged lawmakers to require real-time verification in upcoming digital asset regulations.

He added that safety can only be ensured when systems are linked, and actual holdings match ledger balances in real time. His comments emphasized the urgent need to improve South Korea’s crypto oversight framework. The main issue stemmed from Bithumb relying on internal ledgers rather than blockchain-based records.

Unlike blockchain confirmations, Bithumb’s system functioned like a spreadsheet, leaving room for errors. This flaw allowed the accidental transfer of 620,000 Bitcoin that the exchange did not actually hold. The fallout happened quickly. Within 35 minutes before Bithumb froze affected accounts, 86 users sold about 1,788 Bitcoin. Some transferred the proceeds to personal bank accounts, while others bought different tokens. This sudden sell-off caused a sharp price drop on Bithumb’s platform.

🚨A simple typo, a $44B disaster.

A Bithumb employee intended to send 695 users a promotional reward of 2,000 KRW (~$1.40) but mistakenly entered the unit as Bitcoin.

Instead of a small coffee's worth of cash, users received 2,000 $BTC each, creating "ghost coins" worth 15x… pic.twitter.com/L6c7GLmtrW

— Conor Kenny (@conorfkenny) February 9, 2026

Bithumb CEO Lee Jae-won said the biggest areas of damage were panic selling and forced liquidation of over 30 users who had pledged Bitcoin as collateral. He explained that the exchange was focusing on these two areas for damage relief. The malfunction triggered automatic margin calls, leaving many investors caught off guard.

Lee Chan-jin described the incident as “catastrophic” for customers. Since the Bitcoin prices have later rebounded, people who were obliged to return their coins may suffer losses, which can lead to lawsuits against the exchange.

Crypto Exchange Fixes Errors and Apologizes to Customers

Earlier, Bithumb claimed that it had already fixed 99.7% of the internal errors by reversing the ledger entries. Now, the company is holding direct talks with around 80 customers who withdrew their money and are requesting them to voluntarily return the amount in Korean won. Lawyers have warned that the courts may demand a refund in Bitcoin, which could lead to further losses for the customers.

In their official apology statement, Bithumb admitted that the incident is serious. The company vowed that the incident would never occur again. To do this, the company would redesign the entire asset payment process. The company also clarified that the incident did not occur due to hacking or security breaches. The company assured that customer assets are safe.

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