SEOUL, Feb 09 (AJP) - A “fat finger” blunder at Bithumb, South Korea’s second-largest cryptocurrency exchange, has become a windfall for a few and a nightmare for many, involving more than $40 billion in erroneous transactions and raising fresh concerns over the safety of crypto trading in Korea.
At around 7 p.m. KST last Friday, a staff member attempted to distribute 620,000 won in prize money but mistakenly transferred 620,000 won worth of Bitcoin instead—each unit valued at about 100 million won at the time.
At the time of the incident, Bithumb reportedly held about 40,000 Bitcoins. Yet the erroneous payout amounted to nearly 15 times that figure.
The exchange said it had recovered more than 99 percent of the wrongly distributed assets, but about 125 Bitcoins—worth roughly 13 billion won—remain unreturned.
As volumes several dozen times larger than actual market capitalization were deposited into accounts, some investors panicked. This triggered a flash crash, sending Bitcoin prices plunging from around 100 million won to 80 million won and causing significant losses for many traders.
Korean investors are familiar with such “fat finger” incidents. In 2018, Samsung Securities mistakenly issued “ghost stocks” worth 112 trillion won after entering share quantities instead of cash dividends. The Bithumb case has revived memories of that episode.
Weak safeguards despite massive volumes
The scandal has reignited criticism over the lack of preventive mechanisms in South Korea’s crypto market, which ranks among the world’s largest by trading volume.
Although the Act on the Protection of Virtual Asset Users has been in force since July 2024, its provisions are seen as falling short of safeguards in major overseas markets.
The incident stemmed from the absence of internal systems to block abnormal transactions at the platform level. Once the erroneous data was entered, it translated directly into actual transfers.
In Japan, a 2025 amendment to the Payment Services Act allows withdrawals to be immediately blocked when irregular activity is detected, supported by approval processes using cold wallets.
While Korean rules require at least 80 percent of assets to be stored in cold wallets, they impose few concrete restrictions on withdrawal procedures, complicating recovery efforts.
In the European Union, detailed ledger and disclosure requirements allow regulators to access full records of balances, transaction purposes and histories, making it difficult for exchanges to record volumes far exceeding their holdings.
Fears of manipulation mount
Some experts view the incident as evidence that the risks of “naked short selling” in crypto markets have been underestimated.
“During the Samsung Securities fat finger incident, there were overwhelming suspicions that the firm traded non-existent shares to intentionally manipulate stock prices,” said Seok Byoung-hoon, an economics professor at Ewha Womans University. “I believe this case will be remembered as a representative example showing that naked short selling is indeed possible in the crypto world.”
Korean investors are particularly sensitive to such practices. In May 2024, the Financial Supervisory Service identified about 150 billion won in illegal short selling by seven investment banks, including HSBC Hong Kong and BNP Paribas.
The findings led to a temporary ban on short selling, which was lifted in March 2025.
FSS Governor Lee Chan-jin said Monday that authorities would respond sternly, without specifying details.
“The essence of this issue is that erroneous virtual data actually led to real-world transactions,” he said.
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