South Korean cryptocurrency exchange Bithumb triggered sharp market volatility after mistakenly distributing an enormous amount of Bitcoin to customer accounts during a promotional rewards event. What was intended to be a small cash giveaway instead resulted in one of the largest operational errors ever reported in the crypto industry.
According to the exchange, the incident occurred when a system misconfiguration caused users to receive Bitcoin instead of small fiat rewards. Rather than crediting approximately 2,000 Korean won per account, some users were mistakenly issued at least 2,000 Bitcoin each.
In total, roughly 620,000 Bitcoin were erroneously distributed, an amount valued at approximately $44 billion based on prevailing market prices at the time.
Rapid Containment Limits Losses but Does Not Prevent Market Disruption
Bithumb said it detected the error quickly and restricted trading and withdrawals for 695 affected accounts within about 35 minutes. The exchange reports that it has since recovered approximately 99.7% of the excess Bitcoin.
Despite the swift response, a limited number of users were able to sell or transfer some of the mistakenly credited Bitcoin before restrictions were fully implemented. About 125 Bitcoin, valued at roughly $9 million, remain unrecovered. Bithumb stated it will absorb those losses using corporate funds.
The exchange emphasized that the incident was not the result of hacking or an external security breach, and that customer assets and system security were not compromised.
Bitcoin Price Volatility Follows Internal Exchange Shock
The error caused immediate disruption in Bitcoin trading on Bithumb’s platform. During the incident, Bitcoin briefly fell by as much as 17%, dropping to around 81.1 million Korean won before rebounding later in the session.
While the sharp price movement was largely confined to Bithumb’s internal order books, the episode unsettled broader market sentiment and raised renewed concerns about operational risk at centralized exchanges.
Regulators Move In as Internal Controls Are Questioned
South Korea’s financial regulators responded quickly, stating that the incident exposed potential weaknesses in internal control systems across virtual asset platforms. Regulatory authorities reportedly began on-site inspections at Bithumb’s offices and requested documentation identifying employees authorized to issue cryptocurrency payments.
Local reporting indicated that investigators are examining whether internal systems allowed asset issuance without sufficient settlement checks or supervisory oversight. Regulators described the situation as highlighting structural vulnerabilities in exchange operations.
Management Acknowledges Process Failures
In internal communications, senior executives acknowledged that the incident revealed deficiencies in operational safeguards. Company leadership reportedly stated that a single configuration error should not have had the ability to destabilize the exchange’s trading environment.
Management said the company is prioritizing improvements in oversight, controls, and system design to reduce the risk of similar failures in the future.
Compensation Measures Announced for Affected Users
Bithumb announced a compensation plan aimed at mitigating customer losses tied to abnormal trading conditions during the incident. Measures include reimbursing users who sold Bitcoin at unusually low prices during the disruption, with an additional premium paid on top of the original sale amount.
The exchange also said it would temporarily waive trading fees across all markets and provide a small cash credit to users who were actively trading at the time of the incident.
Incident Complicates Exchange’s Strategic Plans
The operational failure comes at a sensitive moment for Bithumb, which has been pursuing plans to become the first South Korean cryptocurrency exchange to list publicly in the United States. Separately, consumer protection authorities have recently opened inquiries into the company’s marketing practices.
For now, the exchange remains focused on stabilizing operations, compensating affected users, and reviewing internal systems. Specific technical or governance changes have not yet been publicly detailed.
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