South Korea Eyes Aggressive Crypto Reforms After $40B Bithumb “Ghost Coin” Blunder
South Korea’s financial regulators are quickly pushing for stricter cryptocurrency rules after a major system error at Bithumb...
Quick overview
- South Korea's financial regulators are pushing for stricter cryptocurrency rules following a major error at Bithumb that mistakenly credited over $40 billion in Bitcoin to users.
- The incident, caused by an administrative mistake during a promotional event, highlighted serious vulnerabilities in the digital asset systems of the South Korean market.
- Regulators are now developing new legislation to address these issues, with a focus on ensuring the stability and credibility of cryptocurrencies as legitimate financial assets.
- The Bithumb glitch has raised concerns about the future of institutional investment and the potential launch of spot Bitcoin ETFs in South Korea.
South Korea’s financial regulators are quickly pushing for stricter cryptocurrency rules after a major system error at Bithumb, one of the country’s biggest exchanges. The mistake, which led to over $40 billion in Bitcoin being wrongly credited to users, has revealed serious weaknesses in the digital asset systems of this key Asian crypto market.
The blunder comes at a delicate time for the South Korean market, threatening to derail a year that was supposed to be defined by institutional adoption and the potential launch of spot Bitcoin ETFs.
The $40 Billion “Random Box” Glitch
On February 6, 2026, a simple administrative mistake during a “Random Box” promotion turned a small marketing event into a major crisis. A Bithumb employee accidentally set the reward unit to Bitcoin (BTC) instead of Korean Won (KRW**)**.
- About 620,000 BTC, which is almost 3% of all Bitcoin worldwide, was credited to 695 users.
- Instead of getting about 2,000 KRW (around $1.40), users saw 2,000 BTC (worth $132 million) appear in their accounts.
- The sudden appearance of these “ghost coins” caused a quick crash on Bithumb, with Bitcoin prices dropping 17% to 81 million KRW ($55,000), even though global prices stayed above $66,000.
South Korean cryptocurrency exchange Bithumb said it accidentally gave away more than $40 billion worth of bitcoins to customers as promotional rewards, triggering a sharp selloff on the exchange https://t.co/gxOveTjlpD pic.twitter.com/VhNAeoWno3
— Reuters Asia (@ReutersAsia) February 7, 2026
Bithumb froze the affected accounts within 35 minutes and has recovered 99.7% of the assets, but the incident has changed how regulators in Seoul view the industry.
Regulatory Backlash: “Ghost Coins” and Structural Risk
Lee Chan-jin, Governor of the Financial Supervisory Service (FSS), spoke directly at a recent press conference, saying the incident showed “deep vulnerabilities” that hurt the credibility of crypto platforms.
“This case demonstrates the structural problems of electronic systems for virtual assets,” Lee remarked. “Resolving the issue of ‘ghost coins’ is essential if cryptocurrencies are to be treated as legitimate financial assets.”
The FSS has already sent an inspection team to Bithumb to find out why basic safety checks were missing, especially why such a large transaction did not require several layers of approval.
Phase 2 Legislation: What’s Next for South Korean Crypto?
South Korea put the Virtual Asset User Protection Act in place in July 2024. But after the Bithumb incident, a new round of laws is being developed and should be finished in the first half of 2026.
Key Regulatory Priorities for 2026:
Market Implications: ETFs and M&A Activity at Risk
The timing of the Bithumb mistake is especially tough for the industry. Only weeks earlier, the South Korean government had shown support for institutions as part of its 2026 Economic Growth Strategy.
- Spot Bitcoin ETFs: Plans to allow spot digital asset ETFs in 2026 are now being closely reviewed. Governor Lee stressed that crypto must show it is stable before it can be part of the traditional financial system.
- Institutional Investment: In January, the ban on companies investing in crypto was lifted, letting firms put up to 5% of their equity into digital assets. Now, analysts warn that the Bithumb scandal might make companies hold off on these plans because of new concerns about risk.
- The “Bithumb Penalty”: Bithumb has set up a 100 billion KRW ($68 million) Customer Protection Fund to win back trust, but the damage to South Korea’s “Kimchi Premium” market is still serious.
Conclusion: A Global Warning
The Bithumb incident is a clear warning to regulators worldwide that security means more than just stopping hacks; it also requires strong operations. As South Korea tightens its rules, the world is watching to see if the country can balance fast innovation with the strict safety standards of traditional finance.
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