South Korea’s central bank has urged tighter safeguards after a major trading error at Bithumb caused severe disruption in February. Officials said crypto exchanges must adopt circuit breakers to halt trading and prevent similar market incidents.
The Bank of Korea cited the Bithumb case as a clear example of system risk. The issue began during a promotional payout event. Users were meant to receive small rewards between 2,000 and 50,000 won. A data entry mistake changed the outcome.
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Bithumb Input Error Triggers $43B Bitcoin Transfer
On February 6, 2026, a staff member entered Bitcoin instead of Korean won. This triggered a transfer of 620,000 BTC into user accounts. The value of the transfer reached about 60 trillion won, or nearly $43 billion. The error spread quickly across the platform.
Consequently, there was an immediate effect on prices. The prices of Bitcoin-KRW dropped from 98 million won to 81 million won on Bithumb. This represented a decrease of about 17.3%. Other cryptocurrency exchanges, such as Upbit, did not record any changes in prices.
There were reported losses for traders on Bithumb during this incident. The total loss stood at about 1 billion won. According to the Central Bank of Korea, the losses were due to poor internal controls of the exchange. Selling in panic mode and stop-loss contributed to the losses.
According to the Bank of Korea, it took the company about 20 minutes before realizing that an issue existed. The problem was discovered at 7:20 PM. In this case, users traded and withdrew their funds without any form of restrictions.
However, the depositing and withdrawal operations were frozen in the evening. The freeze occurred between 7:35 PM and 7:40 PM. At that time, the negative market effect had already spread due to the delays, which constrained the capabilities of the exchange.
Korea Pushes Crypto Safeguards and Legal Reforms
The central bank emphasized the need for increased safety measures at crypto exchanges. It suggested systems capable of identifying input errors swiftly. Automatic suspension of trading when abnormalities arise was also advised.
According to the authorities, these regulations should be included in future laws. The upcoming proposal of a Digital Asset Basic Act can cover these issues.
The idea is to increase stability and minimize effects from system faults. The regulators demand more control over the trading platform.
Meanwhile, there is a review being conducted regarding crypto tax policy, which includes some proposals to eliminate the expected 20% tax on profits made from cryptocurrencies. This tax can lead to double taxation. There are also concerns about the tax applying to foreign investors.
There is increased pressure on South Korea to improve its oversight capabilities. The recent Bithumb incident has shown that there were vulnerabilities in risk management. The central bank’s response reflects growing concern over system failures.
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