Bithumb paper bitcoin scandal gets investigated South Korea has launched investigations into @BithumbOfficial following a massive operational blunder on February 6, 2026, where the exchange accidentally airdropped approximately 620,000 BTC (valued at around $40–44 billion at the time) to users during a promotional event. This incident, originally reported by outlets like Decrypt, exposed what regulators described as serious "structural vulnerabilities" in the platform's internal controls and processes.What HappenedBithumb ran a "Random Box" promotion where participants were supposed to receive small cash rewards in Korean won (KRW), typically around 2,000 KRW (~$1.37–$1.50) per winner, with higher tiers up to 50,000 KRW or so. Due to a human input error by a staff member, the reward unit was mistakenly set to BTC instead of KRW. This resulted in ~695 users (reports vary slightly between 249–695) being credited with large amounts of Bitcoin often 2,000 BTC each, totaling ~620,000 BTC across accounts. These were essentially "ghost" or phantom Bitcoins on Bithumb's internal ledger (not actual on-chain transfers from their reserves in many cases), but the error briefly inflated users' balances massively. Some users quickly sold the credited BTC, causing a sharp flash crash on Bithumb's BTC/KRW pair—prices dropped as low as ~$55,000 (or lower in some reports) before rebounding, while global BTC prices remained stable. Bithumb detected the mistake within minutes (reports say 5–20 minutes), froze affected accounts, restricted trading/withdrawals for those users, and recovered 99.7% of the erroneous credits. They stated it was not a hack, security breach, or external attack—just an internal configuration/input error with no impact on actual customer asset security. Note: Further evidence of my thesis that almost all Bitcoin trading is taking place on "paper" Bitcoin on centralized software, and has nothing to do with Bitcoin on chain, with zero regulation. Perhaps this haneous case will bring regulators awareness and end to uncollatoralized crypto centralized trading on centralized exchanges.