Bithumb's Bitcoin Flash Crash: Billions in Error, Millions in Losses

A technical glitch at Bithumb mistakenly awarded users billions in Bitcoin, causing a temporary price crash and significant sell-offs. Here's what happened.

Bithumb's Bitcoin Blunder Sparks Flash Crash

In a bizarre turn of events that reads like a scene from a financial thriller, South Korea's major cryptocurrency exchange, Bithumb, found itself at the center of a massive technical error on February 6, 2026. What was intended as a modest promotional giveaway turned into a multi-billion dollar Bitcoin bonanza for hundreds of users, triggering a dramatic flash crash on the platform.

The 'Random Box' Ruckus

The incident unfolded during Bithumb's "Random Box" promotion, where participants were supposed to receive a mere 2,000 Korean won (about $1.37). However, a significant system malfunction resulted in approximately 700 users being credited with 2,000 BTC each, a staggering sum valued at roughly $140 million per erroneous transfer at current market rates. In total, an estimated $95.4 billion in phantom Bitcoin was distributed internally, though thankfully, no actual blockchain transactions occurred.

Flash Crash and Furious Selling

Bithumb's internal systems detected the error within a mere five minutes. Despite the swift detection, chaos ensued as users attempted to capitalize on the windfall. Financial authorities in South Korea estimate that over $2 billion worth of this 'phantom' Bitcoin was sold off in that brief window. This aggressive selling spree caused Bitcoin's price on Bithumb to plummet to $55,000, a stark contrast to its prevailing market price of around $60,000 on other exchanges. This stark price disparity underscored the localized nature of the crash, with global Bitcoin markets remaining largely unaffected.

Internal Glitch, Not Hackers

Bithumb was quick to issue a statement, clarifying that the incident was not the result of any external hacking or security breach. Instead, the exchange attributed the colossal error to an internal technical malfunction during the setup of the promotional event. "This incident is unrelated to any external hacking or security breach," Bithumb stated, assuring users that their assets and the platform's overall security remained intact. The exchange confirmed that no users lost their pre-existing funds, and the erroneous transactions were reversed, restoring accurate account balances.

Lessons Learned (and Potentially Lost)

While Bithumb managed to contain the damage and reverse the transactions, the event highlights the inherent risks and potential for catastrophic errors within even sophisticated trading platforms. The rapid sell-off of over $2 billion in phantom Bitcoin, even for a few minutes, demonstrates the extreme volatility and herd mentality that can grip the crypto market. It serves as a stark reminder that while technological advancements drive the crypto world forward, human error and system glitches can still lead to significant, albeit temporary, market dislocations. The recovery was swift, but the memory of that Bitcoin price dip will likely linger.

So, while the Bitcoin market might have given us a bit of a scare thanks to Bithumb's tech troubles, it's good to know that our digital assets are generally safe and sound. Here's to smoother sailing and fewer phantom Bitcoins in the future!