South Korea Exchange Bithumb Admits System Flaws Caused $40 Billion Bitcoin Error
South Korea's prominent cryptocurrency exchange Bithumb has confirmed that significant deficiencies in its internal systems allowed for a major error during a recent promotional event. The incident resulted in customers being erroneously credited with around 620,000 Bitcoins, valued at over $40 billion based on market prices. Executives from the exchange addressed the matter publicly, emphasizing that the mistake originated from operational oversights rather than any external breach.
The error took place Friday when a staff member input payout amounts in Bitcoin instead of the intended Korean won equivalents for a giveaway campaign. Small rewards of a few hundred won per user ballooned into massive Bitcoin allocations across hundreds of accounts. This quickly triggered unusual trading activity and contributed to a noticeable drop in Bitcoin's price on the platform.
Parliamentary Hearing Reveals Operational Shortcomings
Bithumb CEO Lee Jae-won appeared before a parliamentary committee to provide details on how the incident unfolded. He explained that a 24-hour lag in updating virtual asset balances played a key role in preventing timely detection of the discrepancy. The exchange's checks comparing transfer volumes to actual holdings proved ineffective, and funds were not properly segregated for the transaction.
South Korean lawmakers voiced concerns over the vulnerabilities exposed by this event in one of the world's most active cryptocurrency markets. The giveaway amounted to roughly 15 times Bithumb's reported Bitcoin holdings of 42,000 BTC at the time. Regulators noted that a portion of the credited Bitcoins, described in some reports as erroneous ledger entries, were traded before accounts could be frozen.
Bithumb acted swiftly by restricting trading and withdrawals for the approximately 695 affected customers within 35 minutes. The exchange has recovered nearly all of the mistakenly credited assets, with only a small fraction sold in the brief window before interventions. Customers who liquidated those holdings face legal obligations to return the equivalent value.
The error led to temporary market turbulence, with Bitcoin experiencing a sharp decline on the platform and broader price pressure. Financial authorities have initiated inspections and discussions on enhancing oversight for virtual asset service providers. The Financial Supervisory Service governor suggested that crypto exchanges should ideally face regulations similar to traditional financial institutions, though current laws present limitations.
Bithumb has issued apologies and committed to comprehensive system upgrades to prevent similar occurrences. The company plans to cover any remaining losses from the incident out of its own resources.