**Korea's Bithumb Mistakenly Gives Away $40 Billion in Bitcoin**

The South Korean cryptocurrency exchange, Bithumb, has found itself at the center of a major controversy after it inadvertently gave away a staggering $40 billion worth of bitcoin to its customers as part of a promotional rewards program. The incident, which was reported over the weekend, has sent shockwaves throughout the financial community and has raised questions about the security and management practices of the exchange.

According to reports, Bithumb had planned to distribute small cash rewards of 2,000 Korean won ($1.40) or more to each user as part of the promotion. However, instead of receiving these modest rewards, winners were given at least 2,000 bitcoins each. The exchange has since recovered nearly all of the coins in question.

In a statement released by Bithumb, the company clarified that the incident was not related to external hacking or security breaches and that there were no issues with system security or customer asset management. However, financial regulators in South Korea have taken notice of the incident and have announced plans to conduct an on-site inspection of Bithumb and other crypto exchanges if irregularities are discovered in reviews of their internal control systems, holdings, and operations of virtual assets.

The incident has exposed the vulnerabilities and risks associated with virtual assets, according to regulators. This comes as the price of bitcoin continues to plummet, hitting its lowest point since November 2024 after a massive drop from its record high of over $126,000 in October 2025.

**The State of the Market: How Bitcoin's Decline Affects Balance Sheets and Equity Markets**

As the price of bitcoin continues to fall, investors and financial analysts are left wondering about the impact on balance sheets, equity markets, and forced behavior. PYMNTS took a closer look at the situation and noted that companies whose valuation narratives are explicitly tied to bitcoin function like leveraged bitcoin ETFs, even if they're not structured as such.

When bitcoin drops 10%, the stock might drop 25% or 40%. This volatility can spill into broader risk sentiment, especially for tech and speculative growth names. According to a note from investor Michael Burry, close to 200 publicly traded companies now hold significant amounts of bitcoin. If prices fall further, risk managers and boards will begin recommending sales not for strategic reasons but to protect capital and satisfy risk policies.

These sales, broadcast through financial reporting, can create downward pressure on price. The report highlights the interconnectedness of cryptocurrency markets and the broader financial system, emphasizing the need for a deeper understanding of these dynamics to avoid future shocks.

**Regulatory Scrutiny and Market Volatility**

The Bithumb incident has brought the spotlight on regulatory scrutiny and market volatility in the cryptocurrency space. As regulators continue to review internal control systems and operations, exchanges must be prepared to address any concerns and demonstrate their commitment to security and customer asset management.

Meanwhile, the drop in bitcoin prices is a stark reminder of the risks associated with this highly volatile market. Investors must remain vigilant and adapt to changing market conditions to avoid losses and capitalize on opportunities.