Bithumb's £32bn Bitcoin Airdrop: A Liquidity Shock and Recovery

The core event was a catastrophic internal error. During a promotional "Random Box" giveaway, a Bithumb employee mistakenly typed "BTC" instead of "Korean won" when setting a reward. The result was that 249 users each received 2,000 bitcoins instead of the intended 2,000 won. This single configuration flaw injected a staggering 620,000 bitcoins into the exchange's internal ledger, a total worth approximately $44 billion at the time.

The immediate market impact was a violent flash crash on Bithumb's BTC/KRW trading pair. As recipients attempted to sell their suddenly enormous balances, prices on the exchange briefly slumped 15.8% to near 81 million won. This represented a drop of over 16% from the global market price, creating a massive arbitrage opportunity and triggering panic selling. The crash was swift, with prices on the platform plunging 10% in the space of a minute before beginning to recover.

Bithumb's response was remarkably fast. The exchange restricted trading and withdrawals for the 695 affected customers within 35 minutes of the erroneous distribution. This decisive action halted further selling pressure. The recovery was near-total: Bithumb recovered 99.7% of the 620,000 bitcoins sent, with only 125 BTC remaining unrecovered. The incident, while severe, was contained to the exchange's internal system, with no on-chain movement of the coins and no breach of customer assets.

The Recovery Mechanics: Containing the Flow

The exchange's containment was immediate and effective. Bithumb restricted trading and withdrawals for the affected 695 customers within 35 minutes of the error, halting the initial wave of selling. This decisive action, combined with its internal controls, prevented the situation from spiraling further. The liquidation prevention system operated as designed, averting any cascading forced liquidations that a wider price collapse might have triggered.

The recovery numbers show a near-total containment of the accidental liquidity. Bithumb successfully recovered 618,212 bitcoins immediately. Of the remaining 1,788 bitcoins that users managed to sell, the exchange recouped 93 percent. This leaves only 125 bitcoins unrecovered, representing a 99.7% recovery rate overall. The entire flow of coins was internal to Bithumb's system; no assets were moved on-chain or stolen.

Crucially, this was an internal configuration error, not a security breach. The root cause was a single employee mistyping the reward unit as "BTC" instead of "Korean won" for a promotional event. Bithumb has explicitly stated that this incident is unrelated to external hacking or security breaches, and that customer assets remain secure. The financial watchdog has launched an inspection, but the mechanics of the recovery demonstrate the system's ability to contain a severe operational failure.

Broader Context: Regulatory Scrutiny and Market Position

The incident occurred at a moment of intense regulatory pressure. Just days before the error, South Korea's Fair Trade Commission (KFTC) launched an on-site probe into Bithumb over its claims of offering the highest liquidity among domestic exchanges. The watchdog is assessing whether the exchange's advertising was misleading, given that Upbit handled over $180.7 billion in trades in Q4 2025 compared to Bithumb's $86.5 billion. This audit of Bithumb's market leadership adds a layer of scrutiny to the liquidity shock it created.

The error also triggered a new investigation by the Financial Supervisory Service (FSS). The watchdog is now examining Bithumb's measures to protect its users and the possibility of a full recovery of the mistakenly sent bitcoins. This dual probe-by the KFTC on marketing claims and the FSS on user protection-highlights a regulatory environment where exchanges are being held to higher standards for both transparency and operational resilience.

Viewed together, the timing and context suggest a vulnerability in Bithumb's position. While it managed a near-total internal recovery, the event exposed a critical flaw in its operational controls. This comes as the exchange faces a market reality where its dominance is being challenged, with Upbit capturing more than double its trading volume. The regulatory fallout may now extend beyond the immediate liquidity incident to questions about the exchange's overall governance and its ability to manage risk in a concentrated and scrutinized market.