Bithumb Error Triggers South Korean Crypto Crackdown

South Korea is ramping up efforts to crack down on crypto market manipulation this year. Regulators are now targeting tactics used by large traders and exchanges that can distort prices.

The move comes after a major Bithumb error on February 7, 2026, when the exchange accidentally distributed 620,000 BTC worth around $44 billion. The glitch caused Bitcoin to briefly drop to $55,000 on Bithumb before recovering 99.7% of its value.

What Happened With Bithumb

Bithumb’s system error sent a huge amount of Bitcoin to multiple accounts. This accidental transfer created a sudden surge in sell orders and the result was a sharp, localized flash crash. While most of the lost value recovered quickly, the incident exposed serious risks in exchange systems.

Regulators Take Action

South Korea’s Financial Supervisory Service (FSS) responded fast. The agency announced plans for AI-driven investigations to detect manipulations such as “whale pumping,” fake price support and sudden mass-buy spikes.

These tactics involve large traders or exchanges artificially inflating or deflating prices to profit at the expense of smaller investors. By using AI tools, regulators aim to identify suspicious patterns more efficiently and prevent future market disruptions.

Why This Matters

South Korea has a retail-heavy crypto market, with monthly trading volumes exceeding $100 billion. High volumes make the market sensitive to errors or manipulative trades. Small glitches can have outsized effects, as the Bithumb incident showed.

Experts say that increased regulatory oversight could improve long-term stability. By cracking down on manipulative tactics, authorities hope to protect ordinary investors while maintaining confidence in South Korea’s crypto ecosystem.

Lessons From the Bithumb Glitch

The Bithumb glitch underscores the risks of digital asset trading. Exchanges must strengthen systems and controls to prevent accidental transfers or technical errors. Meanwhile, regulators are signaling they will monitor markets more closely than ever before.

For traders and investors, the message is clear, how South Korea is taking market manipulation seriously. The combination of advanced AI monitoring and stricter oversight could set new standards for the global crypto industry.

The post Bithumb Error Triggers South Korean Crypto Crackdown appeared first on Coinfomania.