Bithumb's 60 Trillion Won Glitch: A Liquidity Shock with Price Impact

The error was a simple unit misfire. Bithumb's internal system mistakenly credited winners with 2,000 BTC each instead of the intended 2,000 Korean won reward. This single-digit mistake created a staggering 60 trillion won phantom liquidity event, flooding hundreds of user accounts with bitcoin that existed only on the exchange's books.

The price impact was immediate and severe. The sudden influx of sell orders from users trying to cash out the phantom balances triggered a violent selloff. Bitcoin on Bithumb briefly slumped 17% to 81.1 million won and traded as much as 15.8% below prices on other exchanges. This created a massive price dislocation, with the local KRW pair hitting lows around 81 million won while global prices held steadier.

The exchange's response was swift. Bithumb's internal controls immediately recognized the abnormal transaction and restricted trading and withdrawals for the affected 695 customers within 35 minutes of the erroneous distribution. This rapid containment, coupled with the exchange's liquidation prevention system, prevented a broader market cascade. Prices normalized quickly, with the platform's BTC/KRW pair recovering to around 104.5 million won after the initial crash.

Market Resilience and Leverage Metrics

The price dislocation was entirely contained within Bithumb's order book. While the local BTC/KRW pair fell sharply, global Bitcoin prices showed no sustained move beyond the initial shock. This isolation was due to the selling pressure being internalized; users sold directly on Bithumb, overwhelming its liquidity without spilling over to other exchanges. The event highlighted how a single exchange's operational error can create a local liquidity crisis, but not a systemic one.

At the same time, the broader market was already under stress from a concurrent global selloff. This downturn was amplified by leverage, with more than $1.1 billion in derivatives positions liquidated during the period. This massive wave of forced selling created a fragile backdrop where any additional shock, like Bithumb's glitch, could trigger violent price swings. The underlying market was primed for volatility, making the exchange's internal dislocation more pronounced.

Bithumb's market position also explains the limited systemic impact. The exchange holds a 28% share of local trading volume, trailing leader Upbit's 68%. This means its price action, while dramatic internally, carries less weight in the overall market narrative. Its isolated order book and smaller market share acted as a buffer, preventing the local selloff from becoming a broader market event. The shock was contained because the exchange itself was not the central nervous system of the Korean crypto market.

Regulatory Catalysts and Forward Watchpoints

The exchange's operational crisis is unfolding against a backdrop of heightened regulatory scrutiny. Just days before the liquidity glitch, the South Korean Fair Trade Commission (FTC) sent investigators to Bithumb's headquarters to probe its marketing claims of having "the highest level of liquidity" in March and April 2025. This investigation, which also examines a disputed cash giveaway promotion, adds significant pressure on Bithumb during a period of reputational and financial strain.

The primary catalyst for the exchange's stability now is the resolution of this FTC probe. The outcome will directly impact Bithumb's ability to maintain its competitive position, especially as it aims to become the first South Korean exchange to go public in New York this year. Any finding of false advertising could result in fines or mandated changes to its marketing, potentially undermining its brand and user trust at a critical juncture.

Watch for regulatory sanctions or required changes to Bithumb's public statements. The FTC's power to penalize "false or exaggerated labeling" under the Fair Labelling and Advertising Act is a tangible risk. The exchange's competitive standing, currently lagging leader Upbit's 68% market share, could be further challenged if its regulatory standing is called into question. For now, the immediate liquidity shock has passed, but the regulatory overhang remains a key forward watchpoint.