A crypto firm accidentally sends $40 bn in bitcoin after a major operational error at South Korean exchange Bithumb, briefly disrupting trading and triggering sharp price volatility on the platform.
The incident occurred during a promotional event on Friday and affected hundreds of users before the exchange halted activity and began recovering the mistakenly distributed assets.
What Happened at Bithumb
Bithumb said it accidentally transferred around 620,000 bitcoins, valued at more than $40 billion, to 695 users. The exchange was originally meant to distribute small promotional rewards of about 2,000 South Korean won, roughly $1.37, per customer.
Due to an internal error, some users instead received approximately 2,000 bitcoins each. Trading and withdrawals were suspended within 35 minutes of the mistake, according to the company.
Market Impact and Trading Disruptions
The sudden inflow of bitcoin caused sharp volatility on the platform as some recipients sold the tokens. Bithumb acknowledged that the error led to panic selling and unfavourable trade executions for certain users.
Bitcoin prices on Bithumb briefly dropped by about 17 percent to 81.1 million won late Friday before stabilising. The exchange said it brought the situation under control within five minutes of detecting abnormal trading activity.
Recovery Efforts and Compensation
Bithumb said it successfully recovered 99.7 percent of the mistakenly sent bitcoin. The company stated it would cover the remaining losses using its own assets.
Key measures announced by Bithumb included:
• Full compensation for users affected by price discrepancies
• Coverage of the entire price difference caused by the incident
• An additional 10 percent bonus for impacted customers
The exchange estimated total losses at around 1 billion won.
Regulatory Response in South Korea
South Korea’s financial regulators, including the Financial Services Commission, said the incident highlighted risks and weaknesses in virtual asset management. Following an emergency meeting, regulators warned of possible on-site inspections of Bithumb and other exchanges if irregularities are found in internal controls, asset holdings, or operational systems.
Bithumb stressed that the incident was not linked to hacking or external security breaches and said customer asset management systems were not compromised.
Broader Context in the Crypto Market
The incident comes as bitcoin has declined globally this week, erasing gains that followed US President Donald Trump’s election victory in November 2024.
Bithumb is South Korea’s second-largest cryptocurrency exchange, trailing market leader Upbit.
Conclusion:
The episode underscores ongoing operational and regulatory challenges facing cryptocurrency exchanges, particularly in high-volume markets like South Korea. Authorities are expected to closely monitor compliance and risk management practices in the sector following the incident.
