According to National Assembly data reported by Yonhap News Agency, crypto loans taken out at South Korean exchanges were forcibly liquidated 87,110 times from January 2025 to August 2026. Of those, 86,721, or 99.6%, happened at a single exchange: Bithumb, the country's No. 2 crypto exchange behind market leader Upbit. Upbit, Coinone and DigitalX (one of Korea's won-based crypto exchanges) combined accounted for just 389.
The common reading is that Bithumb's lending was unusually risky. But the real story lies elsewhere. In August, Bithumb's liquidation rate relative to loans taken out (3.67%) was lower than Coinone's and DigitalX's (4.94%). Liquidations piled up at one exchange because nearly all the crypto borrowing happened there.
Bithumb launched lending first, with the most coins → borrowers flocked to it → so did the forced sales when prices fell. The figures come from data that Rep. Park Sang-hyuk of the Democratic Party, a member of the National Assembly's National Policy Committee, obtained from the country's four won-based crypto exchanges, as reported by Yonhap on Oct. 12.
- Why does borrowing crypto lead to forced sales?
Crypto lending lets you put up coins or won deposits you already have as collateral and borrow coins from the exchange. Because you can sell the borrowed coins first and buy them back cheaper to repay if the price falls, it is often called a kind of "crypto short selling."
A forced liquidation happens when the borrowed coin's price moves the wrong way, you lose the collateral (margin) you put up, and the loan is closed. It is like borrowing money against your car: if the car becomes worth less than the debt, you have to hand it over. The difference is that coin prices move far faster than car prices.
- Why were liquidations concentrated at Bithumb?
Bithumb was the first to offer lending, and it lets users borrow the widest range of coins. In August, 15,925 of the 19,206 loans taken out at the four exchanges, or 82.9%, were at Bithumb. Yonhap explained that "as a result, most forced liquidations also happened at Bithumb." Note, though, that the periods differ: 82.9% covers August alone, while 99.6% is a cumulative figure for about one year and eight months.
The gap in cumulative users is even wider: 136,673 at Bithumb, 13,563 at Dunamu, which runs Upbit, 7,583 at Coinone and 256 at DigitalX. Bithumb has about 10 times as many as Upbit.
The starting terms differed too. When it launched, Bithumb let users borrow up to four times their collateral, while Upbit lent only three coins, at up to 80% of collateral. Put simply, borrowers went where they could borrow more kinds of coins, in bigger amounts.
A quick calculation shows how risky 4x is. Put up 10 million won (about $7,500) and borrow 40 million won (about $30,000) worth of coins, and a price move of just 25% against you means a loss of 10 million won, all the money you put up (a theoretical example that ignores fees).
- What happened in Bithumb lending's first month?
According to the Financial Services Commission, about 27,600 people used Bithumb's lending service in its first month or so, borrowing about 1.5 trillion won (about $1.1 billion). Of them, 13%, or 3,635 people, were forcibly liquidated. That is 13 out of every 100 borrowers losing their collateral.
On Aug. 19, 2025, financial regulators issued administrative guidance telling exchanges to stop signing up new lending business. Bithumb kept the service running after cutting leverage from 4x to 2x.
On Sept. 5, 2025, guidelines took effect as self-regulation by DAXA (the association of South Korea's won-based crypto exchanges). They limited leverage, meaning lending more than the collateral, set a per-person cap of 30 million to 70 million won (about $22,000 to $52,000) depending on investing experience, and required exchanges to disclose liquidation figures every month. On Sept. 23, 2025, DAXA warned Bithumb for breaking rules on lending scope and limits.
- Fewer people are borrowing as prices fall, so why are loans getting bigger?
In November 2025, when Bitcoin was trading in the $110,000s, crypto loans numbered 99,178. By August 2026, as Bitcoin fell into the $50,000s, they had dropped 80.6% to 19,206. Borrowers fell 78.1%, from 21,847 to 4,781.
Yet the average loan grew 2.4 times, from 2.63 million won (about $1,960) to 6.32 million won (about $4,720). In other words, four out of five borrowers left, and those who stayed borrow more at a time.
Borrow 6.32 million won worth of coins, and a 10% price move against you costs about 630,000 won (about $470). At 2.63 million won, it was about 260,000 won (about $195) (a hypothetical calculation). A single liquidation now hurts more.
- BITPRESS Insight
Looking only at 99.6%, it is easy to conclude that avoiding Bithumb is enough. But by August rates, Coinone and DigitalX (4.94%) were higher than Bithumb (3.67%), and Upbit was at 1.68%. What triggers a liquidation is not the exchange's name but how much you borrow and how the coin's price moves.
The lending market today has few borrowers, each borrowing a lot at once. If your loan is 2.4 times bigger, a price move of the same percentage against you costs you 2.4 times as much.
If you are thinking about borrowing crypto, ask "how far does the price have to move against me before my collateral is gone?" before you ask "which exchange is safe?"
Sources
https://www.yna.co.kr/view/AKR20261009001200002
https://www.hankyung.com/article/2025081979296
https://www.heraldk.com/article/2025081818360402049
https://dealsite.co.kr/articles/147042
https://news.bizwatch.co.kr/article/mobile/2025/09/05/0024
https://www.twig24.com/news/finance/2025/09/23/20250923500171
Glossary
crypto lending — A service that lets you put up coins or won deposits you already have as collateral and borrow coins from an exchange; it is often called a kind of "crypto short selling."
Forced liquidation — When the borrowed coin's price moves the wrong way, you lose the collateral (margin) you put up, and the loan is closed.
Leverage — Borrowing more money or coins than the collateral you put up to invest; 4x means borrowing four times your collateral.
DAXA — The Digital Asset eXchange Alliance, a joint body formed by South Korea's won-based crypto exchanges, including Upbit and Bithumb.
Administrative guidance — When a government agency asks a company, through official letters rather than a legal order, to do or stop doing something.
Upbit and Bithumb — South Korea's two biggest crypto exchanges, where people buy and sell coins with Korean won; Upbit is No. 1 and Bithumb No. 2.
BITPRESS articles are information to help your investment decisions, not a recommendation to buy or sell any stock or coin. Investment decisions and their results are your own responsibility.
