Did a Hong Kong fund kill Bitcoin? Bithumb’s ‘phantom’ BTC: Asia Express

CoinTelegraph

by Yohan Yun

February 9, 2026

AI-Generated Deep Dive Summary

Bitcoin's recent volatility has sparked intrigue, with theories suggesting a Hong Kong-based fund may have played a significant role in the sell-off. According to Parker White of DeFi Development Corp, a popular theory circulating on Crypto Twitter links the downturn to a leveraged spot Bitcoin ETF (IBIT) trade that collapsed under pressure. The theory suggests a Hong Kong fund used cheap Japanese yen funding to bet on Bitcoin's rebound through IBIT options. However, as losses mounted and liquidity dried up, the position may have been forced to unwind, potentially triggering broader margin calls across markets tied to yen-funded leverage. Meanwhile, South Korean exchange Bithumb made headlines for its "phantom" Bitcoin incident. During a promotional campaign, the exchange mistakenly distributed over 620,000 BTC worth nearly $42.5 billion to users—15 times more than it actually held at the time. The error occurred despite Bithumb reporting only around 42,031 BTC in its mid-year report. While the exchange managed to recover 99.7% of the distributed assets, some users were able to sell the erroneously sent Bitcoin before it was clawed back, raising questions about the platform's internal controls and regulatory compliance. The incident has highlighted concerns over crypto exchange transparency and accountability, particularly under South Korea's stringent user protection laws. Regulators have launched investigations, underscoring the importance of ensuring exchanges maintain adequate reserves and adhere to reporting requirements. Both events—Bitcoin's ETF-driven sell-off and Bithumb's "phantom" Bitcoin episode—underscore the risks and vulnerabilities inherent in the cryptocurrency market, where leveraged trading, margin calls, and human error can have significant ripple effects. For crypto enthusiasts and investors, these developments serve as a reminder of the interconnectedness and potential fragility of digital asset markets. The ongoing inquiry into IBIT holdings through upcoming Form 13F filings will likely provide further clarity on whether large funds played a role in Bitcoin's recent volatility. Meanwhile, Bithumb's misstep serves as a cautionary tale about the importance of robust operational safeguards and regulatory oversight in the crypto space.

Verticals

cryptoblockchain

Originally published on CoinTelegraph on 2/9/2026